Read demand curves and explain demand changes
Distinguish individual from market demand and separate price movements from shifts caused by other determinants.
Cambridge IGCSE Economics 0455 / IGCSE (9–1) Economics 0987, 2027–2029 Version 1. Apply each model to the stated evidence and qualify conclusions where effects depend on context. Practice is original and self-checked; it is not a Cambridge paper, mark scheme or official grade.
Before you begin
- No prior economics study is assumed. Read the scenario for the decision-maker, the market or economy involved, the time period and the evidence supplied.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
If income rises and demand for a normal good increases at every price, what happens?
What you will learn
- Define and aggregate demand
- Distinguish movement along from a shift
- Explain common demand determinants
Demand requires willingness and ability
Demand is the quantity consumers are willing and able to buy at different prices over a period. Market demand is found by adding individual quantities at each price.
A demand curve usually slopes down: other things equal, a lower own price leads to an extension in quantity demanded along the curve. This is a movement, not a shift.
Other determinants shift the curve
Income, preferences, population, expectations and prices of related goods can change demand at each own price. For a normal good, higher income tends to shift demand right; for an inferior good the relationship can be reversed.
Substitutes compete for similar uses; complements are often consumed together. State the determinant and direction, holding other influences constant.
Pause and explain
The price of a good falls while income and related-good prices stay fixed. What changes?
Worked example
The price of tea is unchanged, but coffee becomes more expensive. Explain the likely effect on tea demand if tea and coffee are substitutes.
Show the worked solution
- The price of tea itself has not changed.
- A substitute becomes more expensive.
- Some buyers may switch toward tea at each tea price.
Answer Tea demand may increase, shifting its demand curve right. The size of the change depends on how readily consumers substitute between the drinks.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Draw or describe the demand change when the good's own price rises, other things equal.
Give me a hint
Use the existing curve and name the change in quantity demanded.
Compare my reasoning
- Keep non-price determinants fixed.
- Move to a higher price and lower quantity demanded on the same curve.
- Call it a contraction in quantity demanded.
It is a movement up along the same demand curve: quantity demanded contracts as own price rises, other things equal.
Look for these in your work
- Other determinants fixed
- Movement along curve
- Contraction named
Household incomes rise and bus travel is a normal good. Explain the graph and one limit to the prediction.
Give me a hint
Normal means demand responds positively to income, at each price.
Compare my reasoning
- Income is a non-price determinant.
- Demand shifts right for a normal good.
- Fares, service quality and other changes could affect actual journeys.
The demand curve for bus travel shifts right if it is normal. Actual use also depends on fares, service quality and alternatives, so the income effect is not a guaranteed quantity increase in every context.
Look for these in your work
- Determinant identified
- Direction correct
- Limit considered
A cinema raises ticket prices while a nearby streaming subscription becomes cheaper. Explain why the change in cinema attendance may have more than one cause.
Give me a hint
Separate an own-price movement from a related-good shift.
Compare my reasoning
- The cinema's own price causes a movement along its demand curve.
- A cheaper substitute can shift cinema demand left.
- The two effects can reinforce one another, but their size is unknown.
The cinema price rise contracts quantity demanded along the existing curve. A cheaper streaming substitute may also shift cinema demand left, so the total change combines two mechanisms.
Look for these in your work
- Movement distinguished
- Shift distinguished
- Combined effect qualified
Common mistakes
- Calling a lower own price a rightward shift
- Assuming higher income raises demand for every good
- Changing several determinants while claiming one cause
What can you explain now?
How is market demand found?
Compare with the explanation
Add consumers' quantities at each price
Horizontal aggregation combines individual quantities.
After trying it yourself, choose your next review. This is your self-assessment.
Your review choice appears on Today. Sign in to sync it across devices.
Make it stick
How is market demand found?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.