Demand — Edexcel A-Level Economics A
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Demand explained
A demand curve shifts when a condition of demand changes at every price.
Read the full explanation
The main conditions are real income, tastes and fashion, prices of substitutes and complements, expectations of future prices, and the size and age structure of the population. A rise in real income shifts demand for a normal good rightwards; a fall shifts it leftwards. A rise in the price of a substitute shifts demand rightwards, while a rise in the price of a complement shifts it leftwards. Changed expectations of future prices can bring forward or postpone purchases. Population growth or ageing shifts demand for particular goods. A change in the good's own price causes a movement along the curve, not a shift.
Your focus
- Identify the conditions of demand that can shift the demand curve.
- Explain the direction of a demand shift caused by a change in a named condition of demand.
- Distinguish a shift in demand from a movement along the demand curve.
Demand exam tips
Marking Points
- A shift of the demand curve means a change in demand at every price, caused by a change in a condition of demand.
- Real income: a rise shifts demand for a normal good rightwards; a fall shifts it leftwards.
- Prices of related goods: a rise in the price of a substitute shifts demand rightwards; a rise in the price of a complement shifts demand leftwards.
- Tastes and fashion: a change in preferences shifts demand rightwards or leftwards.
- Expectations of future prices: expected future price rises can increase current demand; expected falls can reduce it.
- Population size and structure: growth or ageing shifts demand for particular goods.
- A change in the good's own price causes a movement along the demand curve, not a shift.
Examiner Tips
- 💡In multiple-choice questions, identify whether the change is in the good's own price or in a condition of demand before choosing an answer.
- 💡For each option, state the direction of the shift and the condition of demand that causes it.
- 💡Use a quick sketch of demand shifting right or left to check the logic of each option.
Common Mistakes
- Confusing a movement along the demand curve with a shift: a change in the good's own price moves along the curve; a shift requires a change in a condition of demand.
- Treating a rise in the price of a substitute as reducing demand: it raises demand for the good as buyers switch away from the substitute.
- Assuming all income rises increase demand for every good: for inferior goods, a rise in real income can reduce demand.
- Ignoring expectations: expected future price changes can shift current demand even when current prices are unchanged.