Notes for 2.1.3 Consumer and market demand - IB | RevisionDojo
2.1.3 Consumer and market demand Notes
Definition
Market
Any arrangement that connectsbuyers and sellers, enabling them to carry out an exchange.
Individual demand only focuses on the demand of one consumer.
Market demand focuses on all the consumers in the market of a good or service.
Individual demand
The individual demand is the various quantities of a goodorservice that an individual consumer is willing and able to buy at different possible prices during a particular time period, ceteris paribus.
Figure 1: an individual's consumer demand for pizzas
In Figure 1, it can be seen that when the price of a pizza is:
$10, the individual is not willing or able to buy any units, hence the quantity demanded is 0.
$8, the individual is willing and able to buy 2 pizzas.
$6, the individual is willing and able to buy 4 pizzas.
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Definition
Paywall
(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.
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Note
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Tip
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Questions
Recap questions
1 of 5
Question 1
Recap question
Which method correctly describes how the market demand curve is constructed from individual demand curves?
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Note
The law of demand is a fundamental principle in economics that describes the inverse relationship between the price of a good or service and the quantity demanded by consumers. In simpler terms, as the price of a product decreases, consumers tend to buy more of it, and as the price increases, they buy less. This relationship holds true when all other factors remain constant, a condition known as ceteris paribus.
When prices go down, quantity demanded goes up
When prices go up, quantity demanded goes down
DefinitionCeteris ParibusA Latin phrase meaning "all other things being equal." It is used in economics to isolate the effect of one variable by holding all other relevant factors constant.
AnalogyThink of the law of demand like a seesaw: when one side (price) goes up, the other side (quantity demanded) goes down, and vice versa.
