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Demand and the factors that shift it

Edexcel IAL Business · WBS11 Marketing and people

Demand is the quantity of a product that customers are willing and able to buy at each price over a period. This lesson explains the demand curve, the difference between a movement along it and a shift, and the seven factors in the specification that shift demand.

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The demand curve

Draw price on the vertical axis and quantity on the horizontal axis. The demand curve (D) slopes downwards from left to right: as price falls, quantity demanded rises, because the product becomes better value compared with alternatives and more people can afford it.

A change in the product's own price causes a movement along the curve (an extension of demand when price falls, a contraction when price rises).
A change in any other factor causes a shift of the whole curve: right (D to D1) means more is demanded at every price; left means less.

Factors that shift demand

From the specification:

Prices of substitutes: if a rival's price rises, demand for our product shifts right. (Substitutes are alternatives, such as tea and coffee.)
Prices of complements: goods used together (printers and ink). If the price of a complement rises, demand for our product shifts left.
Consumer incomes: for most (normal) goods higher incomes shift demand right; for inferior goods, left.
Fashions, tastes and preferences: a product becoming fashionable shifts demand right.
Marketing, advertising and branding: successful campaigns shift demand right.
Demographics: changes in the size and structure of the population (an ageing population raises demand for healthcare).
External shocks: unexpected events outside the firm's control (a pandemic, war, natural disaster, a health scare).
Seasonality: predictable changes during the year (ice cream in summer, toys before festivals).

Worked example

Explain what happens to demand for electric cars if the price of petrol rises sharply.

Petrol is a complement to petrol cars, which are substitutes for electric cars.
Higher petrol prices make running a petrol car dearer, so some buyers switch.
Demand for electric cars shifts right: more are demanded at every price.

Answer: Demand for electric cars shifts to the right.

Key idea: Own price change: movement along D. Other factors shift D: substitutes, complements, income, tastes, marketing, demographics, external shocks, seasonality.

Check yourself

The price of a chocolate bar falls. What happens on a demand diagram?
- The demand curve shifts to the right
- A movement down along the demand curve, with a higher quantity demanded
- The demand curve shifts to the left
- The supply curve shifts to the left
Show answer
A movement down along the demand curve, with a higher quantity demanded. A change in the product's own price causes a movement along the curve.
The price of coffee rises. What is the likely effect on demand for tea?
- It shifts to the left
- There is a movement along it
- No effect, as they are unrelated
- It shifts to the right
Show answer
It shifts to the right. Tea is a substitute, so some buyers switch to tea.
The price of games consoles rises. What happens to demand for console games?
- It shifts to the right
- It shifts to the left
- There is a movement along it
- It becomes perfectly elastic
Show answer
It shifts to the left. Games are complements to consoles; fewer consoles bought means fewer games demanded.
A seaside ice cream seller sells far more in summer than winter. Which factor in the specification explains this?
- Demographics
- An external shock
- Seasonality
- Indirect taxes
Show answer
Seasonality. Predictable changes during the year.
Give an example of an external shock and explain how it could affect demand for a business's product.
Show answer
A pandemic is an external shock; it closed restaurants and made people stay at home, so demand for restaurant meals shifted left.. Any unexpected outside event that shifts demand.
A country's population is ageing. Which product's demand is most likely to shift right?
- School uniforms
- Baby food
- Healthcare and mobility aids
- Student accommodation
Show answer
Healthcare and mobility aids. An older population needs more healthcare.
Explain how a successful advertising campaign affects the demand curve for a product.
Show answer
It makes more people aware of and want the product, so more is demanded at every price and the demand curve shifts to the right.. Advertising shifts demand right, not along the curve.

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Sources

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Business specification (2018)

Last updated 8 November 2026. Spotted a mistake? Tell us.