The Econ Policy Lab
A live supply-and-demand market. Drag the curves, impose a policy — tax, subsidy, price ceiling, or floor — and watch the four welfare boxes (consumer surplus, producer surplus, government, deadweight loss) update in real time. This is the welfare geometry at the core diagram, made touchable.
Model: Qd = a − b·P · Qs = c + d·P
Q in thousands · $ per unit
Market & policy
Results
Free-market price P*(a − c)/(b + d)—
Free-market quantity Q*a − b·P*—
Demand elasticity at P*−b·P*/Q*—
Supply elasticity at P*d·P*/Q*—
With the policy
Buyers payP_b—
Sellers receiveP_s—
Quantity tradedQ—
Consumer surplusarea under D above P_b—
Producer surplusarea above S below P_s—
Governmentt·Q revenue / −s·Q cost—
Deadweight lossTS* − (CS + PS + Gov)—
The diagram
Things to try
- Impose a $10 tax, then flatten demand (raise b): watch the tax burden shift from buyers to sellers as demand becomes elastic. That's tax incidence, and it's the single most counter-intuitive result in applied micro.
- Set a ceiling just below P*, then far below: the shortage and the deadweight triangle both grow. Rent control in one slider.
- Compare a $10 tax and a $10 subsidy: both create deadweight loss — one by killing good trades, one by funding bad ones.
- Ask Kumu (✳) to connect what you see to your chosen policy shock.
From lab to project
Any policy analysis you write should read like this lab's settings: which curve shifts, what the policy parameter is, and which welfare boxes you'll report. If you can build your shock here, you can spec it there.