Applies to: Paper 1 (micro diagrams + Section A data response), Paper 2 (macro diagrams + Section A data response) and Paper 3 (both). Drawing earns AO1/AO2 marks directly; using a diagram to drive a chain of reasoning earns AO3; data extraction and calculation earn AO1/AO2, and interpreting the data critically earns AO4.
Diagrams are the language of economics. In AQA A-Level Economics, a well-drawn, clearly labelled diagram can earn you marks directly (when the question asks you to draw one) and indirectly (when it supports and strengthens your analysis in an essay or data response). Poorly drawn diagrams — or the absence of diagrams altogether — is one of the most common reasons students fail to access the top mark bands. This lesson covers the essential diagrams, how to draw them for maximum marks, data-response technique, and common mistakes to avoid.
A diagram is not decoration. In a strong answer it does analytical work: it is the thing your sentences point at while you explain a mechanism. The phrase examiners want to see is some version of "as the diagram shows, X shifts to Y, so the equilibrium moves from A to B" — the diagram and the prose are a single argument. The exemplar diagrams in this lesson are drawn to AQA conventions; study not just what they show but which labels make them mark-worthy.
Essential Diagrams for AQA A-Level Economics
Every AQA economics student should be able to draw the following diagrams accurately and from memory. These diagrams appear repeatedly across Papers 1, 2, and 3.
Microeconomic Diagrams (Paper 1 and Paper 3)
1. Supply and Demand (with Shifts)
The most fundamental diagram in economics:
Axes: Price (P) on the vertical axis, Quantity (Q) on the horizontal axis.
Demand curve (D): Downward-sloping from left to right, reflecting the inverse relationship between price and quantity demanded.
Supply curve (S): Upward-sloping from left to right, reflecting the positive relationship between price and quantity supplied.
Equilibrium: Where S and D intersect — mark the equilibrium price (Pe) and quantity (Qe).
Shifts: A shift of the demand curve (D1 to D2) or supply curve (S1 to S2) changes equilibrium price and quantity. Always label the original and new curves, and mark both the original and new equilibrium points.
Key Rule: A change in price causes a movement ALONG the curve. A change in a non-price determinant causes a SHIFT OF the curve. This distinction is tested repeatedly.
Exemplar diagram — an increase in demand. The diagram below shows demand shifting right from D1 to D2 (e.g. a rise in real incomes for a normal good). Note every feature an examiner rewards: labelled axes, both demand curves labelled, an arrow showing the direction of the shift, both equilibria (E1, E2) marked, and dashed guide-lines to the new price and quantity.
In prose you would write: "As the diagram shows, the rise in incomes shifts demand from D1 to D2. At the original price P1 there is now excess demand, so price is bid up. The new equilibrium E2 has a higher price P2 and a higher quantity Q2." That single sentence converts the diagram into AO3 analysis.
2. Production Possibility Frontier (PPF)
Axes: Good A on one axis, Good B on the other.
Shape: Concave to the origin (bowed outward), reflecting increasing opportunity costs.
Key points: Points on the frontier (productive efficiency), inside (inefficiency/unemployment), outside (currently unattainable).
Shifts: Outward shift (economic growth), inward shift (resource destruction), pivotal shift (growth in one sector).
3. Cost Curves: MC, AC, AVC
Axes: Costs/Revenue (£) on the vertical axis, Output (Q) on the horizontal axis.
Average Cost (AC): U-shaped — falls initially due to economies of scale, then rises due to diseconomies of scale.
Average Variable Cost (AVC): U-shaped, always below AC (because AC = AVC + AFC).
Marginal Cost (MC): U-shaped, intersects both AVC and AC at their minimum points.
Exam Tip: The MC curve MUST pass through the minimum point of the AC and AVC curves. This is a mathematical certainty, not just a convention. If MC is below AC, AC is falling; if MC is above AC, AC is rising. Examiners check this.
4. Revenue Curves
Average Revenue (AR): In perfect competition, AR is a horizontal line (the firm is a price taker). In imperfect competition, AR slopes downward (the firm must lower price to sell more).
Marginal Revenue (MR): In perfect competition, MR = AR (horizontal). In imperfect competition, MR slopes downward and lies below AR, with exactly twice the slope of a linear AR curve.
5. Monopoly Diagram
This is one of the most important diagrams in the specification:
Draw MC and AC curves (both U-shaped).
Draw AR (downward-sloping demand curve) and MR (below AR, same intercept, twice the slope).
Profit-maximising output: Where MC = MR. Draw a vertical line down to the Q axis (Qm).
Price: Read up from Qm to the AR curve — this gives the monopoly price (Pm).
Abnormal profit: The shaded rectangle between the AC at Qm and the price Pm, multiplied by Qm. Clearly shade or label this area.
Deadweight loss: The triangle between the competitive output and the monopoly output, bounded by the demand and MC curves. This represents the allocative inefficiency of monopoly.
Exemplar diagram — monopoly profit maximisation. Output is set where MC = MR (Qm); price is read up to the AR curve (Pm); average cost at Qm is ACm; the shaded rectangle is abnormal (supernormal) profit.
6. Monopsony Diagram (Labour Market)
Axes: Wage rate (W) on the vertical axis, Quantity of Labour (Q) on the horizontal axis.
Supply of labour (S = ACL): Upward-sloping — the firm must pay higher wages to attract more workers.
MCL (Marginal Cost of Labour): Lies above the supply curve because the monopsonist must raise wages for all workers, not just the marginal one.
MRPL (Marginal Revenue Product of Labour): Downward-sloping — the demand for labour.
Profit-maximising employment: Where MCL = MRPL. The wage paid is read from the supply curve at this quantity (lower than the competitive wage).
7. Externalities Diagrams
Negative externality (production): MSC lies above MPC. The free market overproduces relative to the socially optimal output. The welfare loss triangle lies between MPB = MSB and MSC, between the optimal and free-market quantities.
Positive externality (consumption): MSB lies above MPB. The free market underproduces relative to the socially optimal output. The welfare gain from moving to the optimal output is shown.
Exemplar diagram — negative externality of production. The market produces at Qmkt where MPC = demand, but the socially optimal output is Q* where MSC = demand. The shaded triangle is the welfare (deadweight) loss from over-production.
8. Consumer and Producer Surplus
Consumer surplus: The area below the demand curve and above the equilibrium price.
Producer surplus: The area above the supply curve and below the equilibrium price.
Deadweight loss: The loss of total surplus caused by market failure, taxation, or monopoly power.
Macroeconomic Diagrams (Paper 2 and Paper 3)
9. AD/AS — Classical (Monetarist) Model
Axes: Price level (PL) on the vertical axis, Real GDP (Y) on the horizontal axis.
AD curve: Downward-sloping.
SRAS curve: Upward-sloping.
LRAS curve: Vertical at the full employment level of output (Yfe), reflecting the classical assumption that the economy tends to operate at full employment in the long run.
Shifts: Show how shifts in AD, SRAS, or LRAS affect the price level and real output.
Exemplar diagram — AD/AS (Classical), demand-pull inflation. An increase in aggregate demand from AD1 to AD2 raises both the price level and real output along the upward-sloping SRAS, with LRAS fixed at the full-employment level Yfe.
10. AD/AS — Keynesian Model
Axes: Same as classical model.
Keynesian AS curve: Has three distinct sections:
Horizontal section: At very low levels of output (spare capacity) — increases in AD raise output without raising the price level.
Upward-sloping section: As the economy approaches full capacity — increases in AD raise both output and the price level.
Vertical section: At full employment — increases in AD raise only the price level (demand-pull inflation).
Exam Tip: You MUST know when to use the Classical model and when to use the Keynesian model. The Classical model is appropriate for analysing the long-run impact of supply-side policies. The Keynesian model is useful for illustrating demand-deficient unemployment and the case for fiscal stimulus during a recession.
11. Phillips Curve
Axes: Inflation rate on the vertical axis, Unemployment rate on the horizontal axis.
Short-run Phillips curve (SRPC): Downward-sloping — showing the short-run trade-off between inflation and unemployment.
Long-run Phillips curve (LRPC): Vertical at the natural rate of unemployment (NRU) — in the long run, there is no trade-off.
Show how expansionary policy moves the economy along the SRPC, and how expectations adjust to shift the SRPC upward.
12. J-Curve
Axes: Current account balance on the vertical axis, Time on the horizontal axis.
Shows how a depreciation of the currency initially worsens the current account (because import prices rise but volumes have not yet adjusted) before improving it (as exports become more competitive and import volumes fall).
The curve dips below the initial level before rising above it, forming a "J" shape.
13. Laffer Curve
Axes: Tax revenue on the vertical axis, Tax rate (%) on the horizontal axis.
The curve rises from the origin to a peak (the revenue-maximising tax rate) and then falls — illustrating that beyond a certain point, higher tax rates reduce tax revenue due to disincentive effects, tax avoidance, and tax evasion.
14. Lorenz Curve and Gini Coefficient
Axes: Cumulative % of income on the vertical axis, Cumulative % of population on the horizontal axis.
Line of perfect equality: A 45-degree line from the origin.
Lorenz curve: Bowed below the line of equality — the further from the line, the greater the inequality.
Gini coefficient: The area between the line of equality and the Lorenz curve, divided by the total area under the line of equality. A Gini of 0 = perfect equality; a Gini of 1 = perfect inequality.
How to Draw Diagrams for Maximum Marks
Examiners mark diagrams against specific criteria. To earn full marks:
1. Label Everything
Axes: Always label both axes clearly (e.g., "Price (£)" and "Quantity", or "Price Level" and "Real GDP").