Head to www.savemyexams.

com for more awesome resources

Cambridge (CIE) IGCSE Your notes

Economics
2.3 Demand
Contents
Demand, Price & Quantity
Conditions of Demand

Page 1 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Demand, Price & Quantity

Your notes
Introduction to Demand
Demand is the amount of a good/service that a consumer is willing and able to purchase at a given
price in a given time period
If a consumer is willing to purchase a good, but cannot afford to, it is not effective demand
A demand curve is a graphical representation of the price and quantity demanded (QD) by
consumers
If data were plotted, it would be an actual curve. Economists, however, use straight lines so as to
make analysis easier

Individual and market demand

Market demand is the combination of all the individual demand for a good/service
It is calculated by adding up the individual demand at each price level
The Monthly Market Demand for Newspapers in a Small Village

Customer 1 Customer 2 Customer 3 Customer 4 Market Demand

30 15 4 4 53

Individual and market demand can also be represented graphically

Market demand for children's swimwear in July is the combination of boys and girls demand

Page 2 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Diagram analysis
A shop sells both boys and girls swimwear Your notes
In July, at a price of $10, the demand for boys swimwear is 500 units and girls is 400 units
At a price of $10, the shops market demand during July is 900 units

Movements Along a Demand Curve

If price is the only factor that changes (ceteris paribus), there will be a change in the quantity
demanded (QD)
This change is shown by a movement along the demand curve

A demand curve showing a contraction in quantity demanded (QD) as prices increase and an extension
in quantity demanded (QD) as prices decrease

Diagram analysis
An increase in price from £10 to £15 leads to a movement up the demand curve from point A to B
Due to the increase in price, the QD has fallen from 10 to 7 units
This movement is called a contraction in QD
A decrease in price from £10 to £5 leads to a movement down the demand curve from point A to point
C
Due to the decrease in price, the QD has increased from 10 to 15 units

Page 3 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

This movement is called an extension in QD

The law of demand captures this fundamental relationship between price and QD
Your notes
It states that there is an inverse relationship between price and QD
When the price rises the QD falls
When prices fall the QD rises

Page 4 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Conditions of Demand
Your notes
Shifts of the Demand Curve
There are numerous factors that will change the demand for a good/service, irrespective of the price
level
Collectively, these factors are called the conditions of demand
Changes to each of the conditions of demand, shift the entire demand curve (as opposed to a
movement along the demand curve)

A graph that shows how changes to any of the conditions of demand shifts the entire demand curve left
or right, irrespective of the price level

For example, if a firm increases their Instagram advertising, there will be an increase in demand as
more consumers become aware of the product
This is a shift in demand from D to D1
The price remains unchanged at £7 but the demand has increased from 15 to 25 units
How Each of the Conditions of Demand Shifts the Entire Demand Curve

A Change in Real Income

Page 5 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Real Income determines how many goods/services can be enjoyed by Income increases
consumers
D Increases Your notes
There is a direct relationship between income and demand for goods
and services Shifts right
(D→D1)
Income decreases
D Decreases
Shifts left
(D→D2)

A Change in Tastes and Fashion

If goods and services become more fashionable, then demand for them Good becomes
increases more fashionable
There is a direct relationship between changes in taste/fashion and D Increases
demand
Shifts right
(D→D1)
Good becomes less
fashionable
D Decreases
Shifts left
(D→D2)

Improved Advertising and Branding

If more money is spent on advertising or branding, then demand for Advertising

goods and services will increase as more consumers become aware of increases
the product
D Increases
There is a direct relationship between branding or advertising and
demand Shifts Right
(D→D1)

Page 6 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Advertising
decreases
Your notes
D Decreases
Shifts left
(D→D2)

Changes in the Prices of Substitute Goods

Changes in the price of substitute goods will influence the demand for a Price of Good A
product/service increases
There is a direct relationship between the price of good A and demand D for Good B
for good B increases
For example, the price of a Sony 60" TV increases so the demand for LG Shifts Right
60" TV increases
(D→D1)
Price of Good A
decreases
D for Good B
decreases
Shifts left
(D→D2)

Changes in the Prices of Complementary goods

Changes in the price of complementary goods will influence the Price of Good A
demand for a product/service increases
There is an inverse relationship between the price of good A and D for Good B
demand for good B decreases
E.g. The price of printer ink increases so the demand for ink printers Shifts left
decreases
(D→D2)
Price of Good A
decreases
D for Good B
increases

Page 7 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
 Head to www.savemyexams.com for more awesome resources

Shifts right
(D→D1) Your notes
Changes in Population Size or Distribution

If the population size of a country changes over time, then the demand Population
for goods/services will also change Increases
There is a direct relationship between the changes in population size D Increases
and demand Shifts Right
(D→D1)
Demand will also change if there is a change to the age distribution in a
country, as different ages demand different goods and services E.g. Population
An ageing population will buy more hearing aids Decreases
D Decreases
Shifts Left
(D→D2)

EXAMINER TIP
The difference between a movement along the demand curve and a shift in demand is essential to
understand. You will be repeatedly examined on this and it is important that you use the correct
language to show that you understand the difference between a change in quantity demanded and
a change in demand.
When price changes (ceteris paribus), there is a movement along the demand curve resulting in a
change to quantity demanded. When a condition of demand changes, there is a shift of the entire
demand curve resulting in a change to demand.

Page 8 of 8

© 2015-2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers