Intro
Economic graphs are essential tools for understanding the behavior of markets and the relationships between different economic variables. Two of the most fundamental graphs in economics are the demand and supply graphs, which help us understand how prices and quantities of goods are determined in a market. In this article, we will guide you through the process of creating a demand and supply graph in Excel easily.
Why Create Demand and Supply Graphs in Excel?
Before we dive into the steps of creating a demand and supply graph in Excel, let's quickly explore why it's beneficial to create these graphs in Excel. Excel is a powerful tool that allows us to easily manipulate data, perform calculations, and create visualizations. By creating demand and supply graphs in Excel, we can:
- Easily update data and see how changes in demand or supply affect the market
- Analyze the relationships between different economic variables
- Visualize the equilibrium price and quantity in a market
- Experiment with different scenarios and see how they impact the market
Step 1: Set Up Your Data
To create a demand and supply graph in Excel, we first need to set up our data. We will need two tables of data: one for the demand schedule and one for the supply schedule.
| Price | Quantity Demanded |
|---|---|
| 10 | 100 |
| 9 | 120 |
| 8 | 140 |
| 7 | 160 |
| 6 | 180 |
| Price | Quantity Supplied |
|---|---|
| 6 | 80 |
| 7 | 100 |
| 8 | 120 |
| 9 | 140 |
| 10 | 160 |
Step 2: Create a Chart
Next, we will create a chart in Excel to visualize our data. To do this, follow these steps:
- Select the data range for the demand schedule (A1:B6).
- Go to the "Insert" tab in the ribbon.
- Click on the "Chart" button in the "Illustrations" group.
- Select the "Scatter" chart type.
- Click "OK" to create the chart.
Repeat these steps for the supply schedule (A7:B12).
Step 3: Customize the Chart
Now that we have created our chart, we need to customize it to make it look like a demand and supply graph.
- Add a title to the chart by clicking on the "Chart Title" button in the "Chart Tools" tab.
- Change the x-axis label to "Price" and the y-axis label to "Quantity".
- Add a legend to the chart by clicking on the "Legend" button in the "Chart Tools" tab.
- Move the legend to the bottom of the chart by clicking on the "Legend" button and selecting "Bottom".
Step 4: Add a Trendline (Optional)
If we want to make our graph look more like a traditional demand and supply graph, we can add a trendline to the chart.
- Right-click on the demand data series and select "Trendline".
- Select the "Linear" trendline option.
- Repeat these steps for the supply data series.
Step 5: Analyze the Graph
Now that we have created our demand and supply graph in Excel, we can analyze the graph to understand the relationships between the variables.
- The point where the demand and supply curves intersect is the equilibrium price and quantity in the market.
- The demand curve shows the relationship between the price of a good and the quantity demanded.
- The supply curve shows the relationship between the price of a good and the quantity supplied.
Gallery of Demand and Supply Graphs
Conclusion
Creating a demand and supply graph in Excel is a simple and effective way to visualize the relationships between economic variables. By following the steps outlined in this article, you can create a demand and supply graph in Excel easily. Whether you are a student, teacher, or economist, this graph is an essential tool for understanding how markets work.