Economics - 0455 CIE

Demand

Overview

Why does a shop drop its price when sales are slow, and why does a concert ticket cost more the moment everyone wants to go? Behind both lies one of the most powerful ideas in economics: demand. It describes exactly how the quantity buyers want changes as the price moves, and it is the first half of the engine that sets every price in a market.

In this lesson you will define demand, see how the choices of single buyers add up to the demand of a whole market, and learn to draw and read the demand diagram with confidence. You will also tell apart a movement along the curve from a shift of the whole curve, the distinction that earns the most marks.

Objectives

definition of demand
link between individual demand and market demand
drawing and interpretation of the demand diagram

Lesson Note

Price does not appear from nowhere. It comes from the interaction of demand and supply, and demand is the buyers' side of that story. Once you can draw and interpret a demand curve, you can explain price changes, predict how much a price cut will raise sales, and analyse the effect of almost any event, from a heatwave to a tax. Demand is the foundation the whole allocation-of-resources section is built on.

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Lesson Evaluation

Congratulations on completing the lesson on Demand. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.

You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.

Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.

In economics, demand for a good means the quantity that consumers are: A. willing to buy at any price B. willing and able to buy at a given price C. able to produce D. forced to buy Answer: B
A fall in the price of a good, other things equal, causes: A. an increase in demand B. a decrease in demand C. an extension in demand D. a leftward shift of the curve Answer: C
Which event would shift the demand curve for coffee to the right? A. a fall in the price of coffee B. a rise in the price of tea, a substitute C. a rise in the price of coffee D. a fall in consumer incomes Answer: B
Cars and petrol are complements. A large rise in the price of petrol will: A. shift the demand curve for cars to the right B. shift the demand curve for cars to the left C. cause an extension in the demand for cars D. leave car demand unchanged Answer: B
The market demand curve is found by: A. multiplying price by quantity B. adding up all individual demands at each price C. taking the demand of the richest buyer D. subtracting supply from demand Answer: B