demand

The Demand Schedule group activity
The price of a standard can of Coca Cola is 10p.

Ask each individual in the class how many cans they would be willing
and able to buy at this price. Put the quantity demanded on the
board next to 10p.
Repeat for 20p, 30p, 40p etc.
Is there a correlation between price and quantity demanded.
Draw a demand curve, with price on the y axis and quantity

demanded on the x axis, to show your findings.
E D E XC E L
IG C S E
Topic 1: The market system
E C ON OM IC S 1.3 Demand
4EC1
1.3 DEMAND
 IN THIS UNIT YOU WILL LEARN:

Demand
a) Definition of demand
b) The use of demand curve diagram to show:

 changes in price causing movements along a demand curve
 shifts indicating increased and decreased demand
c) Factors that may cause a shift in the demand curve, including:

 advertising
 income
 fashion and tastes
 price of substitute goods
 price of complementary goods
 demographic changes
LEARNING OBJECTIVES FOR THE SECTION
All Students Will Be Able To: Most Students Will Be Able To: Some Students Will Be Able To:
• will be able to understand and • will be able to utilize the demand • will be able to analyse and
define demand curve diagram to illustrate identify factors that may cause a
changes in price causing shift in the demand curve, and it
movements along a demand impact on the quantity and the
curve and to identify shifts price.
indicating increases or decreases
of demand.
WHAT IS MEANT BY THE DEMAND FOR A GOOD
OR SERVICE?
 Demand is the amount of a product that consumers are willing and able to
buy, at a specific price, at a specific point in time
 Willing suggests that the consumer wants to buy the product
 Able suggests that the consumer has the means to buy the product
 Specific price means a particular price e.g. £9.99
 At a specific point in time suggests that demand occurs in one time frame e.g.
one day
THE INDIVIDUAL DEMAND CURVE
 Economists can collect data regarding individual’s demand for

goods at different prices e.g. how many apples would an individual
buy if the price was 10p, 20p, 30p?
 This can then be used to construct a diagram
 We call this an individual demand curve, showing the demand for
apples by an individual at a range of prices
 The curve for a normal good will slope downwards from left to right
 This shows that as price increases demand falls and vice versa
HOW TO CONSTRUCT AN INDIVIDUAL DEMAND
CURVE FROM CONSUMER DATA
 A demand schedule is a table of data, showing the demand for a

good or service at various prices
 Below is a demand schedule for an individual consumer of books.
As the price of a book falls, demand increases
Price (£) Quantity

demanded
1 10
2 8
3 6
4 4
5 2
HOW TO CONSTRUCT AN INDIVIDUAL DEMAND
CURVE FROM CONSUMER DATA
Price
(£)
5
Price (£) Quantity
4 demanded
1 10
3 2 8
3 6
2 4 4
5 2
1 D
0
2 4 6 8 10 Quantity
THE INDIVIDUAL DEMAND CURVE
Rules for drawing a demand curve:

It is important that i) label the y axis price and the x
you master the
drawing of diagrams in axis quantity
Price
Economics. ii) draw the demand curve
downward sloping from left to
right and label it demand (or D)
iii) to find the quantity demanded
at any given price:
a) select a price (P),
P
shown on the y axis
b) draw a dotted line
towards the demand
curve
D c) draw a dotted line
down towards the x axis to
show quantity (Q)
0 Q Quantity
THE DIFFERENCE BETWEEN SHIFTS OF, AND
MOVEMENTS ALONG, THE DEMAND CURVE
A change in price is A change in price from P to P1 is

always shown by a
movement along the Price shown by a movement along
demand curve. the demand curve lowering
quantity demanded from Q to
Q1.
P1
P
D
Q1 Q
Quantity
A change in price from £10 to

Price £15 is shown by a movement
along the demand curve with
quantity demanded falling from
100 to 120 units.
£15
£10
D
100 120
Quantity
 If any factor that influences demand, other than price,

changes, there is a shift of the demand curve
 An increase in demand is shown by a shift to the right
 A decrease in demand is shown by a shift to the left
 This allows economists to illustrate changes in a variety of
factors and how they impact on demand e.g. changes in
income, tastes or the price of other goods
A change in any factor other than

price e.g. tastes is shown by a
Price shift in the demand curve. An
increase in demand can be seen
by a shift in the demand curve to
the right from D to D1
D D1
Quantity
This shows that at price P the

quantity demanded has increased
Price from Q to Q1.
D D1
Q Q1 Quantity
SHIFTS IN THE DEMAND CURVE
If there is a decrease in demand

due to factors other than price
Price e.g. a decline in population the
demand curve will shift to the left,
from D to D1.
D1 D
Quantity
FACTORS THAT MAY CAUSE A SHIFT IN THE
DEMAND CURVE
Advertising
 This leads to an increase in awareness of a product
 There tends to be a positive correlation between advertising budget and sales
Income
 As a general rule when incomes rise so does demand and vice versa
 More disposable income leads to increased spending
 However the impact is not the same for all businesses
 Luxury goods may be the first to be dropped when incomes fall
 Necessities may see little change
DEMAND CURVE
Substitutes are goods Fashion and tastes

that act as an
alternative e.g. butter  Tastes are constantly changing
and margarine.
 This is particularly true for some industries that see rapid change e.g. fashion
Complements are is seasonal
goods bought alongside
another good e.g. fish
and chips.
The price of other goods and services
 If the price of a substitute good falls this will lead to a fall in demand and
vice versa
 If the price of a complementary good falls then demand will increase and
vice versa
DEMAND CURVE
Demographic changes
 Changes in the make-up of the population will change demand
 An ageing population looks to buy different products e.g. greater use of health
Can natural disasters create care
demand?
 Immigration has seen demand increase for products from EU and non-EU
countries
 Younger people are moving into flats as an alternative to the expensive housing
market
Look at a range of goods and services e.g. your local hairdresser, sports shirts, fizzy
drinks, vegetarian burgers, cars etc.
What do you think is the most important factor influencing demand for these
products? Justify your answers.
QUESTION PRACTISE
1. What is meant by consumer income?
2. Explain how the level of demand is affected by consumer income.
3. Explain how the type of demand is affected by consumer income.
4. Explain how the level of employment will influence demand.
5. Explain how an ageing population will impact on the types of goods

and services needed.
5 MINUTES TEST YOURSELF
1. Define demand.
2. Draw a demand curve.
3. State 4 factors that influence demand.
4. State a substitute to pasta.
5. State a complement to pasta.
6. With the use of 2 diagrams explain the difference in a movement along a demand curve and a
shift in a demand curve.
End
1.3 DEMAND
 IN THIS UNIT YOU WILL HAVE LEARNT:

Demand
a) Definition of demand
b) The use of demand curve diagram to show:

 changes in price causing movements along a demand curve
 shifts indicating increased and decreased demand
c) Factors that may cause a shift in the demand curve, including:

 advertising
 income
 fashion and tastes
 price of substitute goods
 price of complementary goods
 demographic changes

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The Demand Schedule group activity

The price of a standard can of Coca Cola is 10p.

Repeat for 20p, 30p, 40p etc.

Is there a correlation between price and quantity demanded.

Draw a demand curve, with price on the y axis and quantity

 IN THIS UNIT YOU WILL LEARN:

b) The use of demand curve diagram to show:

c) Factors that may cause a shift in the demand curve, including:

 Economists can collect data regarding individual’s demand for

 A demand schedule is a table of data, showing the demand for a

Price (£) Quantity

Rules for drawing a demand curve:

A change in price is A change in price from P to P1 is

A change in price from £10 to

 If any factor that influences demand, other than price,

A change in any factor other than

This shows that at price P the

If there is a decrease in demand

Substitutes are goods Fashion and tastes

1. What is meant by consumer income?

2. Explain how the level of demand is affected by consumer income.

3. Explain how the type of demand is affected by consumer income.

4. Explain how the level of employment will influence demand.

5. Explain how an ageing population will impact on the types of goods

2. Draw a demand curve.

3. State 4 factors that influence demand.

4. State a substitute to pasta.

5. State a complement to pasta.

 IN THIS UNIT YOU WILL HAVE LEARNT:

b) The use of demand curve diagram to show:

c) Factors that may cause a shift in the demand curve, including:

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