Engel curve · income elasticity
Necessities, luxuries and inferior goods: quantity demanded as income changes.
All diagrams / Microeconomics
Microeconomics diagrams
Explore IB microeconomics diagrams for demand and supply, price elasticity, taxes and subsidies, market failure and market power. Move a curve, explain why price and quantity change, and distinguish transfers of surplus from deadweight loss. Market power models are marked HL only.
Price elasticity of demand
Elasticity along demand, total revenue and the polar cases.
Price elasticity of supply
Elastic, inelastic, unit-elastic and polar supply cases.
Perfect competition
Price-taking firm: profit, normal profit and loss.
Perfect competition: industry & firm
Linked market equilibrium, price-taking firm and welfare areas.
Monopoly
MR = MC, price setting and welfare loss.
Monopolistic competition
Short-run outcomes and long-run tangency.
Oligopoly: collusive cartel
Joint profit maximisation; a specific oligopoly model.
Natural monopoly
Falling average cost and unregulated output.
Monopoly: marginal-cost pricing
P = MC, efficient output and the funding gap.
Monopoly: average-cost pricing
P = AC and break-even output.
Negative production externality
Explore private costs, social costs, and overproduction.
Supply & demand
Find the equilibrium where buyers and sellers meet.
Shift of the demand curve
Explore an increase or decrease in demand.
Market clearing: surplus and shortage
Compare quantity demanded and quantity supplied at a market price, then show how price adjusts towards equilibrium.
Price mechanism: signals, incentives and rationing
Trace a demand change and show how prices signal relative scarcity, create incentives and ration goods.
Shift of the supply curve
Explore changing production conditions.
Indirect tax
See who pays a tax and how a market responds.
Subsidy
Explore lower consumer prices and government spending.
Price ceiling
Compare a binding price ceiling with market equilibrium.
Price floor
Explore price floors, excess supply, and lost gains from trade.
Positive production externality
Compare marginal private and social costs of beneficial production.
Negative consumption externality
Compare MPB and MSB when consumption harms third parties.
Positive consumption externality
Explore underconsumption of goods with external benefits.
Corrective indirect tax
Internalize a production externality with a per-unit tax.
Corrective tax: harmful consumption
Use a per-unit tax to reduce consumption toward the social optimum.
Subsidy: beneficial production
Reward production with external benefits and compare output with Q*.
Subsidy: merit-good consumption
Lower the effective supply price to increase merit-good consumption.
Tradable pollution permits
Set an emissions cap and explore the market price of permits.
Regulation: output limit
Compare an enforceable output quota with the social optimum.
Information & advertising
Model an assumed campaign response to harmful consumption.
Education & nudges: merit goods
Model a demand-increasing response to information, advertising or nudges.
Direct public provision
Add publicly provided merit-good output alongside private supply.
Direct provision: beneficial production
Add publicly provided output where production creates external benefits.