Syllabus: Cambridge - IGCSE Economics
Module: 2.3 Demand
Lesson: 2.3.2 Price Demand and Quantity

Introduction

The Cambridge IGCSE Economics syllabus (0455) introduces students to fundamental economic principles and encourages analytical thinking through real-world application. Unit 2.3.2, titled Price, Demand and Quantity, sits within the broader theme of market demand and is essential for understanding how price changes influence consumer behaviour. As part of the syllabus’ “How Markets Work” section, this subtopic builds students’ ability to analyse demand curves and interpret real-world shifts in demand.

Teachers, SLT, and careers leads will find this topic especially valuable, as it links classroom content with real consumer decision-making, encourages data interpretation, and supports Gatsby Benchmark 4 by connecting curriculum learning to economic career pathways.

Key Concepts

According to the Cambridge IGCSE Economics syllabus, students studying 2.3.2 Price, Demand and Quantity should be able to:

• Define effective demand as the willingness and ability to purchase a good or service.

• Describe and draw demand curves showing the inverse relationship between price and quantity demanded.

• Explain the law of demand: as price falls, quantity demanded increases (ceteris paribus), and vice versa.

• Interpret movements along the demand curve, caused solely by changes in price.

• Distinguish between change in quantity demanded (movement along the curve) and change in demand (shift of the curve).

• Use price and quantity data to analyse consumer choices and market behaviour.

These concepts form the foundation for later topics like elasticity, supply, and market equilibrium.

Real-World Relevance

Understanding how price affects demand isn’t just academic—it’s fundamental to everyday life and national policy.

Mini Case Study: Retail and Pricing Strategies

During seasonal sales, retailers such as ASOS and Tesco adjust prices to boost sales. A 20% price reduction on winter clothing often results in a far greater than 20% increase in units sold, illustrating the law of demand. Businesses rely on this understanding to manage inventory and revenue forecasts.

Policy Link: Fuel Duty and Public Behaviour

Governments also manipulate demand through pricing. For example, fuel duty increases are designed to reduce fuel consumption by raising the cost per litre. Conversely, temporary fuel subsidies—seen during the 2022 energy crisis—demonstrated how reducing prices can stimulate demand despite broader economic pressures.

These examples help students see how abstract demand curves influence decisions made by businesses, consumers, and governments.

How It’s Assessed

Cambridge IGCSE Economics uses a variety of assessment formats for this topic, primarily found in:

• Paper 1 (Multiple Choice)
  Example: If the price of a product rises and quantity demanded falls, what is this called?
  → Tests conceptual understanding of demand curve movement.

• Paper 2 (Structured Questions)
  Example: Explain the difference between a movement along the demand curve and a shift in demand.
  → Requires precise use of terminology, often with diagram interpretation.

Command Words to Emphasise:

• Define – Precise definitions (e.g., effective demand)

• Explain – Logical sequencing using economic terms

• Draw/Label – Diagrams must include axis titles, correct curve shape, and price/quantity labels

• Analyse – Applying theory to contextual scenarios (e.g., changes in mobile phone pricing)

To support this, visual literacy (interpreting and drawing demand graphs) is key to success in assessment.

Enterprise Skills Integration

This topic provides natural links to three strategic themes in Enterprise Skills’ framework:

• Commercial Awareness: Students explore how organisations predict demand and adjust pricing strategies to maximise profit and meet market needs.

• Decision-Making & Problem-Solving: Analysing demand shifts requires students to evaluate market changes, interpret data, and understand cause and effect.

• Workplace Readiness: Pricing decisions are at the core of many job roles, from marketing analysts to retail managers, helping students grasp real business dynamics.

Simulation tools from the Skills Hub platform enhance this by letting students manipulate prices in virtual markets and observe changing demand.

Careers Links

This lesson directly supports Gatsby Benchmark 4—linking curriculum learning to careers—by helping students understand how pricing strategies influence roles across sectors. Examples include:

• Retail and E-commerce: Pricing analysts and merchandising teams.

• Marketing and Advertising: Professionals predicting consumer response to promotional campaigns.

• Government and Policy: Economists modelling behaviour in response to tax or subsidy changes.

• Finance and Consultancy: Advisers interpreting market demand to guide investments or business strategy.

Enterprise Skills resources, including Skills Hub Futures, offer virtual scenarios and career pathway connections to reinforce this learning across all year groups.

Teaching Notes

Tips for Effective Delivery:

• Start with scenarios: “What happens to the demand for cinema tickets if the price drops to £2?” gets students thinking before any graphs are introduced.

• Use dual-axis sketching: Students should repeatedly draw demand curves with different prices and quantities to reinforce the inverse relationship.

• Connect to brands they know: Using iPhones, Netflix, or Nike trainers for demand curve examples keeps engagement high.

Common Pitfalls to Address:

• Confusing movement along the curve with a shift of the curve.

• Omitting axis labels in diagrams (which leads to lost marks).

• Forgetting the assumption of ceteris paribus when applying the law of demand.

Extension Activities:

• Use a business simulation tool where students adjust prices and observe demand changes—great for flipped learning or homework.

• Debate: Should the government increase sugar tax to reduce soft drink consumption? This blends demand theory with public policy thinking.