Demand — Edexcel A-Level Business
Test yourself on Demand with PEARSON EDEXCEL A-Level practice questions.
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Demand explained
Everything except the good own price sits in the conditions of demand, and when one of them moves the whole curve slides right or left rather than the market travelling along it.
Read the full explanation
Rising real incomes lift normal goods and depress inferior ones, a cheaper rival brand pulls buyers away, a cheaper complement such as fuel pulls sales of large cars up, a campaign or a viral trend moves preferences, an ageing population reshapes what sells, weather and pandemics arrive unannounced, and many markets simply run to a calendar. For a business this is the sales forecast in disguise: it drives capacity, staffing and inventory, and it separates the causes management can influence, such as branding, from those it can only plan around.
Your focus
- a) Factors leading to a change in demand: changes in the prices of substitutes and complementary goods; changes in consumer incomes; fashions, tastes and preferences; advertising and branding; demographics; external shocks; seasonality
Demand exam tips
Marking Points
- Separating a movement along the curve, caused only by the good own price, from a shift caused by a condition of demand, and using the correct language for each.
- Naming the determinant at work in the case, stating the direction of the shift, then following it to equilibrium price and quantity and to the revenue of the named firm.
- Using evidence from the extract, such as income data, an age profile or a competitor price cut, instead of generic assertion.
- Ranking the determinants for this particular market and justifying which one dominates over the time period in the question.
Examiner Tips
- 💡These determinants usually support a diagram question or an assess question on revenue, so state the shift, then the new equilibrium, then the consequence, in that order.
- 💡Bring in income elasticity of demand whenever incomes change, since its sign and size decide whether a downturn helps or hurts the named business.
- 💡Two determinants argued properly beat six merely named, and the evaluation normally turns on the time period and on what management can control.
Common Mistakes
- Claiming that a rise in the product own price shifts the demand curve, when it causes a movement along the existing curve.
- Assuming demand always rises with income, which fails for inferior goods such as value ranges and budget travel, where income elasticity of demand is negative.
- Listing every determinant in turn with no judgement about which matters here, which collects knowledge marks and no analysis marks.