Keeping the course fresh
Specification content
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The distinction between movement along a demand curve and shifts of a demand curve.
The factors that may cause a shift in the demand curve (the conditions of demand).
The distinctions between movements along a supply curve and shifts of a supply curve.
The factors that may cause a shift in the supply curve (the conditions of supply).
AS/Year 1 Macroeconomics
Edexcel A level Economics
Movements and shifts in demand
and supply activity
Guidance
The purpose of this activity is to give students a real world example of why demand changes as
a result of changes in price and non-price factors in order for them to be able to understand the
difference between movements and shifts.
This is designed to be taught at the start of a series of lessons on supply and demand.
All students will need to be provided with the table at the end of this document to complete as
they do the experiment.
Slide 2: Movements in demand
This activity will introduce students to the idea that quantity demanded changes as the price
changes.
Stress to students that there is no ‘right answer’ — some students may not purchase any video
games at any price and others may purchase the same number of video games at all prices. This
provides an opportunity for a discussion of the difference between individual and market
demand and the fact that some consumers have more inelastic demand than others.
Once the class results are aggregated, students should find a standard downward-sloping
demand curve is produced.
Slide 3: Shifts of demand
Most students will purchase more video games at every price when their income increases. This
is the time to emphasise that non-price factors affect demand — at any given price, without a
change in the price, more is demanded because of an increase in income.
The new market demand curve (D2) should be drawn to the right of D1. A discussion as to what
would happen to demand when income falls could take place at this point.
The extension activity gives students an opportunity to think of other non-price factors that may
affect demand — some prompting might be required here.
Theme 1: Introduction to markets and market failure © Hodder & Stoughton Limited 2015
1
Students should now be able to write in words the difference between a movement and a shift of
the demand curve. You could get them to write out all four scenarios (extension / contraction /
increase / decrease) to consolidate this point.
Slide 5: Applying this to supply
This slide shows how simple it is to translate the principles learnt on the demand curve to the
supply curve. A brief introduction as to what the supply curve is may be required at this point if
not covered in previous lessons.
Again, the key insight here is that movements along the supply curve represent producers
responding to changes in the price. Shifts of the supply curve represent producers responding to
changes in non-price factors.
AS/Year 1 Macroeconomics
Edexcel A level Economics
Slide 4: Movements and shifts
If there is time you could go into some detail as to the determinants of supply. For the purposes
of the exercise that follows, covering costs of production and taxation is advisable. Subsidies
and exogenous shocks could also be considered.
Slide 6: Summary exercise
This activity, which is designed to check whether students have understood the content, could
be completed in groups, pairs or as individuals.
1
This will confuse some candidates, who assume the answer is a shift in demand. This
emphasises the importance of reading the question — the shift in demand has already
happened and the question is asking what happens as a result of the subsequent price
increase (which causes a movement along the supply curve). This is a good opportunity to
discuss the interaction of supply and demand.
2
This is straightforward once candidates realise Majorca and Florida are substitute holiday
destinations.
3
As with the first scenario, reading the question is important. The shift in supply has already
happened and consumers are responding to a price change here.
4
This scenario is an example of a standard non-price determinant of supply. This is a good
opportunity to consolidate the understanding that taxation is a supply and not a demand
factor.
TTheme 1: Introduction to markets and market failure © Hodder & Stoughton Limited 2015
2
TTheme 1: Introduction to markets and market failure © Hodder & Stoughton Limited 2015
3
£60
£50
£40
£30
£20
£10
Price of video game
Individual
demand 1
Market
demand 1
Market
demand 2
AS/Year 1 Macroeconomics
Edexcel A level Economics
Individual
demand 2