Syllabus: AQA - AS and A Level Economics
Module: 3.1.2 Price Determination in a Competitive market
Lesson: 3.1.2.1 The Determinants of the Demand for Goods and Services

Introduction

This article unpacks a key topic from the AQA AS and A Level Economics specification: 3.1.2.1 The Determinants of the Demand for Goods and Services. Grounded in real-world behaviour, this unit explores how and why consumers make purchasing decisions—essential for developing student understanding of market dynamics and price determination.

Demand isn’t just about what people want—it’s shaped by income, price, preferences, and broader social trends. Helping students grasp this unlocks their ability to analyse how markets function and evolve.

Aligned directly to the AQA curriculum, this guide supports teachers with clear, classroom-tested approaches to a topic that underpins much of microeconomics.

Key Concepts

Students should be able to:

• Define demand: Understand the relationship between price and quantity demanded.

• Draw and interpret demand curves: Identify movements along the curve (due to price changes) and shifts of the curve (due to non-price factors).

• Identify determinants of demand beyond price, including:

  • Consumer income

  • Tastes and preferences

  • Price of substitutes and complements

  • Consumer expectations

  • Demographic changes

  • Wealth and distribution of income

• Understand social and emotional influences: AQA explicitly notes that decisions are shaped not only by economic rationale but also by behavioural and social factors.

This section prepares students to explore how shifts in demand influence market equilibrium and price changes—laying the foundation for later analysis of elasticity and market failure.

Real-World Relevance

This topic isn’t abstract—it’s everywhere. Some relevant examples:

• Streaming Services: As subscription fatigue sets in, demand shifts from premium to ad-supported tiers. This reflects changes in income sensitivity and the growing influence of substitutes (e.g. YouTube vs. Netflix).

• Electric Vehicles (EVs): Demand for EVs surged due to rising fuel costs and environmental awareness. But recent shifts in tax incentives and public charging anxiety have triggered a slowdown, despite falling prices.

• Avocados and food trends: A classic example of how fashion, influencers, and social trends affect demand. The “avocado boom” raised prices dramatically due to a shift in consumer preferences.

Mini case studies like these help students connect diagrams to dynamic, real-world behaviours—essential for deep understanding.

How It’s Assessed

This topic appears across AQA AS and A Level papers, especially in Paper 1: The operation of markets and market failure.

Common question types include:

• Short-answer data response: Define and explain factors influencing demand.

• Diagram-based analysis: Draw demand curves and show the effect of changing determinants.

• Extended written responses: Evaluate how a shift in demand might impact a particular market.

Command words to watch for:

• Explain: Define and give a reasoned example.

• Analyse: Use cause-effect chains and link to diagrams.

• Evaluate: Consider multiple perspectives or consequences before reaching a judgement.

Encourage students to link their points clearly to the context given—application marks often differentiate mid-grade and top-grade answers.

Enterprise Skills Integration

This topic lends itself naturally to decision-making and problem-solving, core components of Enterprise Skills’ approach.

Using Enterprise Skills Simulations, students can be placed in a fictional business scenario where they must:

• Predict how changes in demand (e.g. consumer income falls) affect their pricing strategy.

• React to competitor behaviour or shifting customer preferences.

• Use demand data to decide on stock levels or product launches.

These tasks reinforce:

• Commercial awareness: Understanding the “why” behind consumer behaviour.

• Critical thinking: Weighing up multiple factors behind a demand shift.

• Confidence: Learning from trial and error in a risk-free environment.

These skills aren’t bolt-ons—they’re embedded, reinforcing curriculum understanding through active learning.

Careers Links

This content links strongly to Gatsby Benchmark 4 (linking curriculum to careers) and Benchmark 5 (encounters with employers).

Relevant pathways include:

• Market research analyst: Interpreting demand data to forecast trends.

• Product manager: Adjusting products and pricing based on consumer behaviour.

• Retail buyer: Predicting and responding to changes in consumer demand.

• Advertising executive: Crafting campaigns that influence non-price determinants like tastes and preferences.

Teachers can invite professionals (or use case studies) to show how demand theory plays out in marketing, product development, and retail.

Enterprise Skills’ simulation days can also deliver Benchmark 6 experiences of the workplace, with students role-playing in demand-sensitive industries like tech or fashion.

Teaching Notes

What works:

• Use simple demand curve sketches early and often—visual repetition helps.

• Anchor concepts in real products: Phones, trainers, snacks—things they know.

• Layer complexity gradually: Start with price-based movements, then shift to non-price determinants.

• Use demand diaries: Ask students to log their own recent purchases and reflect on what influenced them.

Watch out for:

• Mixing up movement vs. shift: Reinforce that only price causes movement along a curve.

• Confusion over substitutes/complements: Use tangible examples like tea vs. coffee or printers and ink cartridges.

• Over-relying on theory: Students need practice applying ideas to new, unfamiliar contexts—the crux of assessment.

Stretch and challenge:

• Introduce behavioural economics: habits, social proof, emotional spending—add complexity to the decision-making model.

• Use past paper extracts to get students thinking about application, not just knowledge.