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2.2 IGCSE Economics Notes Demand

IGCSE Economics Notes Demand

 

Summary Fill in the Blanks

Click the highlighted blanks to reveal key definitions and ideas related to demand in IGCSE Economics.

1 Meaning of Demand

Demand is the willingness and the ability to
________ buy
a product.
Individual demand refers to the amount of a product an
________ individual
is willing and able to buy.
Market demand refers to the
________ total
demand for a product at different prices.
Aggregation means the
________ addition
of individual components to obtain a total amount.

2 Individual Demand vs Market Demand

Individual demand is the
________ quantity
of goods demanded by a household at a given price and time.
Example: The quantity of oil purchased by
________ an individual
household represents individual demand.
Market demand is the
________ sum
of all individual demands for a product.
If individual demands are 10kg, 5kg, 20kg, 2kg, 13kg, 20kg, 10kg, 12kg, 6kg and 2kg, the market demand equals
________ 100 kg
.

3 Demand Curve

A demand curve is a
________ graph
showing the relationship between price and quantity demanded.
The price of a commodity is shown on the
________ y-axis
.
Quantity demanded is shown on the
________ x-axis
.
A curve showing demand for one consumer is called the
________ individual
demand curve.
A curve showing demand for all consumers is called the
________ market
demand curve.

4 Extension and Contraction in Demand

When price increases from $6 to $9, quantity demanded falls from
________ 500
to
________ 100
.
This situation is called
________ contraction
in demand.
When price
________ decreases
, quantity demanded increases.
This situation is called
________ extension
in demand.

5 Factors Increasing Demand

With a rise in income, people have greater
________ purchasing
power.
Goods whose demand increases with income are called
________ normal
goods.
Goods whose demand decreases with income are called
________ inferior
goods.
Demand may increase due to greater availability of
________ credit
.
Demand may also increase due to advertising and growth in
________ population
.
Another factor is a change in consumer
________ tastes
and preferences.

6 Normal and Inferior Goods

Normal goods are goods whose demand
________ increases
when income rises.
There is a
________ direct
relationship between income and demand for normal goods.
Inferior goods are goods whose demand
________ decreases
when income rises.
There is an
________ inverse
relationship between income and demand for inferior goods.

7 Substitute and Complement Goods

Substitute goods are goods used
________ in place of
another good.
If the price of a good rises, demand for
________ substitute
goods increases.
Complement goods are goods that are
________ used
together.
If the price of a good rises, demand for
________ complement
goods falls.

You need to know:

(a) Demand means willingness and ability to buy a product.

(b) Market demand is the sum of all individual demands.

(c) Demand curves show the relationship between price and quantity demanded.

(d) Demand can extend or contract when price changes.

(e) Factors affecting demand include income, credit, advertising, population and consumer tastes.

(f) Goods can be classified as normal, inferior, substitute or complement goods.

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Solved Past Papers

Board Exam Question Example: MCQ:

In 2010, floods caused severe damage to wheat production. How would this be shown on a market demand and supply diagram for wheat?  [0455/12/O/N/12 -q7]- Answer B
Option Supply Curve Demand Curve
A No Change Shift to the Right
B Shift to the Left No Change
C Shift to the Left Shift to the Left
D Shift to the Right Shift to the Left

 

In 2018 the UK government introduced a tax on the production of sugary drinks. How would this affect the market for sugary drinks as shown on a demand and supply diagram?             [0455_m20_qp_12-Q6]-Answer A
Option Demand Curve for Sugary Drinks Supply Curve of Sugary Drinks
A Contraction in Demand Shift to the Left
B Extension in Demand Shift to the Right
C Shift to the Left Contraction in Supply
D Shift to the Right Extension in Supply

Exam Tips

  1. Understand the Demand Curve: Be able to explain how changes in price lead to movements along the demand curve, and how non-price factors shift the demand curve.
  2. Use Real-World Examples: When explaining shifts in demand, provide examples such as how a rise in income can increase demand for luxury goods.
  3. Identify Conditions of Demand: Be prepared to discuss how changes in income, preferences, and related goods impact demand.
  4. Link Market and Individual Demand: Understand how market demand is the aggregation of individual demands, and explain the relationship between them.