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Explain the meaning of the law of demand, and using examples and diagrams, distinguish between movements along and shifts of the demand curve.

Define demand as the willingness and ability of a consumer to pay a certain price for a good or service at a specific period in time. 

Explain the meaning of law of demand, where, ceteris paribus, as price increases the quantity demanded of a product falls. Give a general example and demonstrate it through a Price v Quantity Demanded diagram. The example could be as general as the the price of Bread (P of Bread (£)) v (QD of Bread (1000)). 

One must then indicate the different prices on the curve and show a movement along of the curve where if the price rises, the quantity demanded will fall. In this case numbers must be used for clarity and ease. 

Afterwards, one must indicate the difference between a movement along the curve and a shift of the curve through reference to the non-price determinants of demand. An example must be given, such as good advertising for example, and a diagram must be drawn to show that if the price remains stable, methods such as good advertising can still lead to an increase in the quantity demanded of a certain product, leading to a shift of the demand curve to right. 

A general conclusion must be given, briefly answerign the question through the idea that there are price and non price determinants that can lead to a change in the quantity demanded of a certain product. 

Raya S. IB Psychology tutor, A Level Psychology tutor, IB Economics t...

2 years ago

Answered by Raya, an IB Economics tutor with MyTutor


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