Allocation of Resources · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 20% of your exam marks.
Demand is the single highest-frequency topic; demand definition, curve shifts, and factors appear on virtually every Paper 2, typically worth 10 to 18 marks.
A change in the good's own price (and nothing else) produces a movement along the existing demand curve. The curve does not move; only the point on it moves.
The syllabus gives two specific names for these movements.
Extension of demand. When the price falls (P↓), the quantity demanded rises, and the point moves down and to the right along the curve.
Contraction of demand. When the price rises (P↑), the quantity demanded falls, and the point moves up and to the left along the curve.
Example — A small café sells flat whites at £3.50 and sells 200 per week. It raises the price to £4.20 and weekly sales fall to 160. Holding everything else constant, this is a contraction of demand: the demand curve itself has not moved, but the point on it has shifted up and to the left.
Two pieces of vocabulary that examiners specifically test:
The two phrases are not interchangeable. Mark schemes mark down candidates who write "increase in demand" when they mean "increase in quantity demanded" and vice versa.