1.1 Syllabus Objectives
1.1 Competitive markets: Markets
The nature of markets
Outline the meaning of the term market.
The law of demand: Explain the negative causal relationship between price and quantity demanded.
Describe the relationship between an individual consumer’s demand and market demand.
The demand curve: Explain that a demand curve represents the relationship between the price and the quantity demanded of a product, ceteris paribus.
Draw a demand curve.
The non-price determinants of demand (factors that change demand or shift the demand curve)
Explain how factors including changes in income (in the cases of normal and inferior goods), preferences, prices of
related goods (in the cases of substitutes and complements) and demographic changes
may change demand (check out PoPzYTEP)
Movements along and shifts of the demand curve: Distinguish between movements along the demand curve and shifts of the demand curve.
• Draw diagrams to show the difference between movements along the demand curve and shifts of the demand curve.
Higher Level only - Paper 3 stuff
Linear demand functions (equations), demand schedules and graphs
Explain a demand function (equation) of the form Qd = a – bP
Plot a demand curve from a linear function
(eg. Qd = 60 – 5P)
Identify the slope of the demand curve as the slope of the demand function Qd = a – bP, that is –b (the coefficient of P).
Outline why, if the “a” term changes, there will be a shift of the demand curve
Outline how a change in “b” affects the steepness of the demand curve.