Demand
Quantity consumers are willing and able to buy at each price.
Demand
Key definitions
Consumers
End users of goods/services.
Rational
Making a logical choice.
Utility
Satisfaction from consumption.
Marginal utility
Satisfaction from one additional unit.
Law of demand
As price falls, quantity demanded rises, ceteris paribus.
Movement along demand
Caused only by a change in the good's own price.
Shift of demand
Caused by non-price factors — new D curve.
Extension of demand
Movement down along D when price falls.
Contraction of demand
Movement up along D when price rises.
Diminishing marginal utility
Each extra unit gives less additional satisfaction — explains downward slope.
PASIFIC
Population, Advertising, Substitutes, Income, Fashion/trends, Interest rates, Complements — non-price demand shifters.
Key concepts
Demand reflects willingness and ability to pay, not just desire.
Confusing shifts with movements is a common exam error.
Non-price demand shifters — mnemonic PASIFIC: Population size, Advertising, Substitutes, Income levels, Fashion/trends, Interest rates, Complements.
Relevant tips
- Always label movements vs shifts clearly on diagrams.
- Use PASIFIC to list demand shifters in essays.