Cambridge IGCSE Economics 0455
Syllabus points
- Define demand and explain the law of demand.
- Distinguish a movement along from a shift of the demand curve.
- Explain the causes of changes in demand.
The law of demand
Demand is the quantity of a good consumers are willing and able to buy at each price over a period of time. The law of demand states that, other things being equal, as price rises quantity demanded falls, and as price falls quantity demanded rises. So the demand curve slopes downwards.
Key definitions
| Term | Definition |
|---|---|
| Demand | The quantity consumers are willing and able to buy at each price. |
| Movement along | A change in quantity demanded caused only by the good's own price. |
| Shift | A change in demand at every price caused by a non-price factor. |
Movement along versus a shift
- A change in the good's own price causes a movement along the curve (a change in *quantity demanded*).
- A change in a non-price factor shifts the whole curve (a change in *demand*).
Causes of a change in demand (shifts)
- Income — higher income raises demand for normal goods.
- Price of substitutes — a dearer substitute raises demand for this good.
- Price of complements — a dearer complement lowers demand for this good.
- Tastes and fashion — advertising and trends.
- Population — more consumers means higher demand.
Worked example
A successful advertising campaign makes a soft drink more popular. Tastes change, so at every price consumers want more — the demand curve shifts to the right (D1 → D2). This is a *shift*, not a movement along, because the cause is a non-price factor.
Common exam mistakes
- Calling a shift a "movement" or vice versa.
- Saying a price change "increases demand" — a price change alters *quantity demanded*.
- Forgetting "other things being equal".
Exam technique
Label diagrams fully (axes, D1 → D2, price and quantity). State the cause of any shift and its direction, then link to the effect on equilibrium (topic 2.5).
Quick revision
- Demand curve slopes down (law of demand).
- Own price → movement; income, related goods, tastes, population → shift.