← Market equilibrium
Labelling a welfare graph completely
A large share of the marks are earned directly on the diagram — before any written explanation — so knowing exactly what to shade and letter-label is its own skill.What a complete welfare-graph annotation includes
- The original equilibrium (Pe, Qe) AND the new equilibrium after the intervention (P1, Q1, or Pmax/Pmin), each labelled.
- Consumer surplus and producer surplus, shaded as triangles (or the new smaller shapes after an intervention) and explicitly labelled as such.
- Government revenue (from a tax or tariff) as a rectangle, or government cost (from a subsidy) as a rectangle — labelled with what it represents.
- Deadweight loss, shaded as the triangle(s) between the demand and supply curves beyond the new quantity traded — and stated explicitly if none exists.
- A shortage or surplus at the ORIGINAL price, shown with dotted lines, when a curve shifts before the market has re-adjusted.
Shading without a letter or label attached
A schedule needs to see which specific shape corresponds to which value — shading an area without a letter (a, b, c, d) or a written label ("deadweight loss") makes it impossible to credit, even when the shading itself is in the correct location.The five-item annotation checklist, in order
- Original AND new equilibrium, each labelled.
- CS and PS, shaded and lettered.
- Government revenue (tax/tariff) or cost (subsidy), as a labelled rectangle.
- Deadweight loss, shaded and stated explicitly — even stating "none" if the intervention causes no loss.
- Any pre-adjustment shortage/surplus, shown with dotted lines at the original price.