In business activities, it is very important to set an appropriate price for a product based on the relationship between supply and demand. However, without careful consideration, it is difficult to know what the appropriate price is just based on data. This is where the "supply and demand curve" can be helpful.

This article provides an overview of the supply and demand curve graph, which can clearly show the appropriate price (equilibrium price) at a glance, as well as how to draw the supply and demand curve graph. Please read to the end.

In addition, organizing relationships and work processes in pricing is also important. This is where the artificial intelligence tool PicDoc, which can automatically generate charts, comes in handy. It can automatically generate simple and easy-to-understand charts using only text, so it can be used in work, study, and even social networking sites. Come and give it a try!

What is the supply and demand curve?

Demand, supply, and equilibrium price

Again, in business, balancing the relationship between supply and demand is fundamental to determining the price of goods. Specifically, this means...

• Demand refers to the quantity of a product that consumers are willing to "buy" at a specific price.
• The supply quantity refers to the quantity of a product that a seller can offer at a specific price and time.

The supply and demand quantities and prices of goods are constantly changing, influencing each other and being influenced by each other. Therefore, it is necessary to determine the optimal price.

Raise the price...

• Although the profit per box is relatively high,
• If the price is too high, consumers may be reluctant to buy because the product is too expensive, or "look for alternatives", resulting in a decrease in demand and an oversupply of products...
• It may lead to a decrease in profit.

On the other hand, if the price is relatively low...

• Demand increases because consumers are willing to buy more.
• However, the supply may not keep up, resulting in shortages and lower profits.
• In addition, if the product is too cheap, the quality of the supply will decline, which will have a negative impact on consumers. They may worry that the product is defective.

Setting the price is also influenced by many other factors. Therefore, it is necessary to set an appropriate price to ensure that both the seller and the buyer are satisfied with the business. This price is called the equilibrium price, also known as the market price.

If you want to display relationships, as mentioned above, the chart generation tool PicDoc is very suitable. If you want to try making a chart, click here to give it a try.

How to Read the Supply and Demand Curve Graph

Now, we try to determine the price of a product based on the equilibrium price. However, both demand and supply are affected by many factors. Where exactly is the equilibrium price?

It is difficult to determine the equilibrium price just from data. In this case, the following supply and demand curve graph can be helpful.

In the graph, the horizontal axis represents the quantity of the commodity, and the vertical axis represents the price of the commodity. Generally, the demand curve slopes downward, and the supply curve slopes upward; the intersection of the two curves represents the equilibrium price and the equilibrium trading volume, that is, the price and supply volume that satisfy both buyers and sellers.

Through these curve graphs, we can clearly understand the supply and demand situation of the product and determine an appropriate price range. For those who need to set prices, especially product developers and those engaged in sales and marketing, using this system will greatly improve work efficiency.

How to Draw the Supply and Demand Curve Graph and Recommended Tools.

How to Draw the Supply and Demand Curve Graph in Excel.

Excel is probably the most commonly used data compilation tool. In this article, we will take Excel as an example to show you how to create a supply and demand curve graph.

Step 1: Determine the coordinate axes and prepare the supply and demand data.

In this experiment, we will use price as the horizontal axis and quantity as the vertical axis. The data is arranged as shown in the following table. Column A is the product price, column B is the quantity demanded, and column C is the quantity supplied.

If you want to use quantity as the horizontal axis, simply enter the quantity of goods in column A, and enter the corresponding prices of the quantity demanded and the quantity supplied in columns B and C respectively.

Step 2: Select the data and choose "Scatter Chart (with Lines)" in the "Insert" tab of Excel, and then a line graph will be inserted.

In this example, if you observe the intersection point of the chart, it is not difficult to find that the equilibrium price is approximately 360 - 370, and the equilibrium trading volume is approximately 50.

Step 3: Double-click on the title, line, or other elements of the line graph, and you can freely edit the text, color tone, etc.

In addition, if you edit the data, it will also be immediately reflected in the chart.

The completed supply and demand curve graph can be pasted into Word or PPT to be clearly conveyed in reports and documents.

Other recommended tools

PicDoc

When setting prices, not only should you display the data, but also explain the supply and demand relationship, the relationship with other products, and the company's approach in an easy-to-understand way so that departments, companies, etc. can recognize this.

In this case, an automatic chart generation tool like PicDoc is very useful. It can analyze the text content and generate easy-to-understand visual effects, allowing anyone to express their ideas in an easy-to-understand way.

Click to experience PicDoc now.

Word/PowerPoint: Easily created through an Excel link

Office software such as Word and PPT can be used in combination with Excel to create similar supply and demand curves. Another article on this blog provides more information on how to create them.

When inserting a chart in Word, the Excel window can be opened simultaneously.

FigJam/miro: Free online drawing tools

Online drawing tools such as FigJam/miro also have templates for supply and demand curves. Although the templates, shapes, and markings are not automatically generated, they can be used to create and edit graphics with a high degree of freedom. They also have collaborative editing functions, which may be suitable for teamwork.

In this article, we briefly introduced the basics of supply and demand curves and how to create them using Excel.

When determining the price of a product, showing the supply and demand balance through a simple and easy-to-understand chart allows anyone to easily grasp it. Please use this information when analyzing and interpreting prices.

Visualizing data and ideas in graphics (such as curves) helps convey complex information in a simple and easy-to-understand way, and the AI visualization tool PicDoc can easily visualize content just by entering text. Click to experience PicDoc immediately