IB Economics: Demand & the Law of Demand — Your Questions Answered

The law of demand states that, ceteris paribus, as the price of a good rises the quantity demanded falls, and vice versa — giving the demand curve its downward slope. It sits within Unit 2: Microeconomics, and examiners expect you to state, explain and diagram the relationship accurately, not just recite the definition.

Demand is the entire relationship between price and quantity — the whole curve. Quantity demanded is one specific point on that curve, the amount buyers want at one particular price. Mixing the two up is one of the most common marking-point losses I see in Paper 1 essays and Paper 2 data-response answers.

A movement along the curve happens only when the good's own price changes — nothing else. A shift of the entire curve happens when a non-price determinant changes, such as income, tastes, or the price of a related good. Confusing these two is the single most common error I mark down in Section A essays.

Non-price determinants that shift demand include income, the price of substitutes and complements, tastes and preferences, population or number of buyers, expectations of future prices, and advertising. An IB examiner wants you to name the specific determinant at play in the data extract, not just list them generically.

Yes — two documented exceptions exist. Giffen goods (a staple like rice in a subsistence economy) see quantity demanded rise when price rises, because the income effect overwhelms the substitution effect. Veblen goods (certain luxury items) sell more at higher prices because the price itself signals status.

According to the IB Economics guide, first examined in 2022 and still current for the 2025 exam session, demand theory is assessed across Paper 1 (extended response essays), Paper 2 (data response) and, at HL, Paper 3 (quantitative techniques). Expect diagram-based short answers, 25-mark essays and real-world data extracts.

Demand questions usually use 'explain', 'distinguish', 'evaluate' or an instruction to 'draw a diagram'. 'Explain' wants reasoned cause-and-effect steps; 'distinguish' wants a genuine comparison of two concepts, not two separate paragraphs. Answering the wrong command term is one of the fastest ways to lose otherwise easy marks.

For demand questions worth 8 marks or more, yes — even when the question doesn't explicitly say 'draw'. Examiners want correctly labelled axes, a clearly shown movement or shift, and a written explanation that actually references the diagram, rather than a diagram sitting unconnected at the bottom of the page.

No — the core law of demand and its determinants are identical content for SL and HL; both groups need the same diagrams and definitions. The difference is context: HL students also sit Paper 3, where demand curves feed into more complex quantitative problems involving elasticity and consumer surplus calculations.

The mistake I see most often, marking mocks year after year, is students shifting the demand curve when only price has changed. If a question says 'the price of coffee increases', that's a movement along the existing curve — not a shift. Save shifts strictly for genuine non-price changes.

Strong answers name a real product and a real event rather than 'a good' in the abstract — a fuel price spike affecting petrol quantity demanded, or a health scare shifting demand for red meat. Examiners award application marks for genuine, specific context over generic textbook phrasing every time.

Use a mnemonic rather than trying to memorise a bare list — I teach students TRIPE: Tastes, Related-goods prices, Income, Population, Expectations. Attaching each letter to one real example (a fashion trend, a substitute good, a pay rise, a growing city, a rumoured price hike) makes recall far more reliable in the exam.

Demand theory is the foundation for price elasticity of demand (PED), which measures how responsive quantity demanded is to a price change along that same curve. You genuinely can't interpret PED correctly without first being solid on movements versus shifts, so lock this topic down before tackling elasticity formulas.

Demand theory is foundational — it appears across nearly every microeconomics question in all three papers, so a shaky grasp here costs marks well beyond this one topic. A student secure on demand curves, movements and shifts tends to handle elasticity, market structure and government intervention topics with far more confidence.