A diagram earns marks when it is labelled, matches your sentences and is referred to in the answer. It shows the same change your words describe, so the two must agree.
This lesson is part of economic reasoning and evaluation. The written side is covered in writing cause, mechanism, effect explanations.
What must a supporting diagram contain?
Check each item before you move on.
- Axes labelled with the variable and unit, for example “Price (RM per kg)” and “Quantity (kg per day)”.
- Each curve named: D and S, then D1 or S1 for the new curve.
- The original equilibrium marked with its price and quantity.
- The new equilibrium marked the same way.
- An arrow showing which way the curve moved.
- A sentence in your answer that refers to it, such as “as shown in the diagram”.
A sketch with only two crossing lines and no labels cannot be credited, because the reader cannot tell what it claims.
Worked example: a cheaper fertiliser
A fictional durian stall market sells kilograms of fruit per day. Demand is the same each day, and a new fertiliser lowers farmers’ costs.
| Price (RM per kg) | Quantity demanded | Old supply | New supply |
|---|---|---|---|
| 6 | 300 | 120 | 180 |
| 7 | 270 | 150 | 210 |
| 8 | 240 | 180 | 240 |
| 9 | 210 | 210 | 270 |
| 10 | 180 | 240 | 300 |
The old equilibrium is where demand equals old supply: RM9 and 210 kg. The new equilibrium is where demand equals new supply: RM8 and 240 kg.
Draw D sloping down, S sloping up and S1 to the right of S. Mark the old point at RM9 and the new point at RM8, with an arrow from S to S1.
Answer text: “Lower costs let farmers offer more at every price, so supply shifts right from S to S1. At the old price of RM9 there is now a surplus, which pushes price down to RM8 and raises quantity to 240 kg, as shown in the diagram.”
Which diagram mistakes cost marks?
The first is a diagram that contradicts the sentences. The text says supply increases but the arrow points left. Check by asking which way the new equilibrium quantity moved, then compare.
The second is moving the wrong curve. Lower input costs act on sellers, so the supply curve shifts, not demand. The third is calling a shift a movement along a curve. A curve shifts only when something other than the good’s own price changes.
Check yourself
The income of buyers of a normal good falls. State which curve moves and which way, then describe the new equilibrium.
Answer
The demand curve shifts left, because buyers can afford less at every price. The supply curve does not move.
At the old price, quantity supplied exceeds quantity demanded, so there is a surplus. Price falls and quantity traded falls, so the new equilibrium lies to the left and lower on the same supply curve. Label D, D1, the arrow, and both equilibrium points.
What to study next
Put diagrams and sentences together in the economic reasoning and evaluation practice. The supply and demand diagram reasoning explorer lets you test a shift on your own device.
If you want a teacher to check your sketches against your writing, see online one-to-one Economics tuition.