Syllabus: Pearson - AS Level Economics
Module: 1.2 How Markets Work
Lesson: 1.2.2 Demand

Introduction

This article supports delivery of the Pearson Edexcel AS Level Economics A specification, specifically section 1.2.2: Demand. Positioned in Theme 1: Introduction to Markets and Market Failure, this unit forms the foundation of microeconomic thinking and is essential for understanding how resources are allocated in a market economy.

Students explore not just the theoretical underpinnings of demand, but also the human behaviours behind economic choices. The specification encourages application to real-world scenarios and requires quantitative and graphical analysis, helping learners to develop essential analytical and evaluation skills early in the course.

Key Concepts

Students are expected to learn:

• Movements vs Shifts: Understand the difference between movements along the demand curve (caused by price changes) and shifts in the demand curve (caused by changes in conditions of demand).

• Determinants of Demand: Including changes in income, price of related goods (substitutes and complements), fashion and tastes, advertising, and demographics.

• Diminishing Marginal Utility: The principle that as consumption of a good increases, the additional satisfaction gained from each additional unit decreases, which influences the shape of the demand curve.

• Ceteris Paribus: Used to isolate the relationship between price and quantity demanded by holding other factors constant.

Graphical representation and written analysis of demand behaviour are integral, reinforcing students’ understanding of cause and effect within economic systems.

Real-World Relevance

Demand theory isn’t just academic—it plays out every day in the market. Recent spikes in air fryer sales, for instance, reflect shifts in consumer preferences, income levels during cost-of-living adjustments, and substitution away from oven use due to energy costs.

Or consider demand for streaming services like Netflix and Disney+. As household incomes fluctuate and new competitors enter the market, demand curves shift, offering ideal case study material. These examples allow students to see demand in action and appreciate its responsiveness to wider economic signals.

How It’s Assessed

In Pearson Edexcel AS Economics, demand appears frequently in both Paper 1 and Paper 3 assessments. Students should be confident in:

• Drawing and labelling demand curves correctly.

• Explaining shifts and movements using appropriate terminology and logic.

• Applying diagrams to real or hypothetical economic scenarios.

• Using quantitative skills to calculate changes and interpret data (e.g. estimating percentage change in quantity demanded).

Command words to watch out for include:

• Explain – requires a clear logical sequence.

• Analyse – students must provide chains of reasoning.

• Evaluate – weigh arguments and justify a conclusion.

Exam questions may range from multiple-choice and short-answer to data response and extended writing, so practice should reflect this variety.

Enterprise Skills Integration

Teaching demand offers clear entry points to enterprise thinking:

• Problem-solving: Students assess how businesses might respond to shifts in consumer demand.

• Decision-making: Learners evaluate pricing strategies or product development based on changing demand trends.

• Adaptability: Case scenarios where businesses pivot due to declining demand build student understanding of resilience and innovation.

By linking demand analysis to entrepreneurial scenarios, you foster transferable skills that matter in both business and civic life.

Careers Links

This topic supports Gatsby Benchmarks 4 (Linking curriculum learning to careers) and 5 (Encounters with employers and employees).

Relevant roles and sectors include:

• Market Analysts: Use demand models to predict trends.

• Retail and Sales Managers: Respond to changing consumer preferences.

• Public Policy Advisors: Anticipate how policy shifts influence household demand.

Realising that demand isn’t static—and that careers in economics involve interpreting and acting on these patterns—brings the subject alive for students.

Teaching Notes

Tips:

• Anchor abstract ideas with practical examples (e.g. new iPhone launches, TikTok product trends).

• Use demand curve sketching as regular low-stakes practice.

• Reinforce key terminology with quick quizzes or flashcards.

Common pitfalls:

• Confusing movements along the curve with shifts.

• Forgetting to label axes or curves properly in diagrams.

• Over-simplifying causality (e.g. “price goes up, demand falls” without recognising income or substitute effects).

Extension activities:

• Get students to track a real product’s demand over time and present causes of fluctuations.

• Introduce behavioural economics ideas—why consumers don’t always act rationally.