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IB DP Economics — Unit 2: Microeconomics | SL | 2.1 Demand
📋 What You Will Learn
- Define demand and distinguish between a change in quantity demanded and a change in demand
- Identify and explain the non-price determinants of demand (shifters of the demand curve)
- Analyse how each determinant causes the demand curve to shift left or right
- Apply the concept of demand shifts to real-world market scenarios and economic events
- Evaluate the relative importance of different demand shifters in specific market contexts
🔍 Guiding Question If price is not the only thing that determines how much consumers want to buy, what else shapes demand — and why does it matter for markets, firms, and governments?
🌍 Why This Matters In 2023, global demand for electric vehicles surged by over 35% despite average EV prices remaining broadly unchanged. Rising petrol prices, government subsidies, and growing environmental awareness all drove consumers toward EVs — none of which involved a change in the price of EVs themselves. This is a demand shift in action: the entire demand curve moved, not just a movement along it.
What Is Demand?
Before examining what shifts demand, it is essential to understand precisely what demand means in economics. Demand is not simply "wanting" something — it requires both willingness and ability to pay.
📖 Definition — Demand Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices over a given time period, ceteris paribus (all other things being equal).
The demand curve slopes downward from left to right, reflecting the inverse relationship between price and quantity demanded. This is the law of demand: as price rises, quantity demanded falls, and vice versa — assuming all other factors remain constant.
Movement Along vs. Shift of the Demand Curve
This distinction is one of the most frequently tested concepts in IB Economics. Confusing the two is a mark-losing error in every paper.
📖 Definition — Change in Quantity Demanded A change in quantity demanded is a movement along an existing demand curve caused solely by a change in the price of the good itself. All other factors are held constant (ceteris paribus).
📖 Definition — Change in Demand (Shift) A change in demand is a shift of the entire demand curve to the right (increase in demand) or to the left (decrease in demand), caused by a change in any factor other than the price of the good itself.
- Movement along the curve: caused only by a change in the good's own price → quantity demanded changes, curve stays fixed
- Shift of the curve: caused by any non-price determinant → at every price level, consumers now want more (rightward shift) or less (leftward shift)
- Rightward shift (D → D₁): increase in demand — consumers demand more at every price
- Leftward shift (D → D₂): decrease in demand — consumers demand less at every price
The Non-Price Determinants of Demand
There are six key non-price determinants of demand in the IB syllabus. Each one, when it changes, shifts the entire demand curve. Understanding the direction and mechanism of each shift is essential for exam answers.
1. Income
When consumers' incomes change, their purchasing power changes — and so does their demand for most goods. However, the direction of the shift depends on the