1.4 Demand
Demand shows the quantity buyers purchase at each price; it slopes down by the law of demand and shifts with income, tastes, related prices, and expectations.
The law of demand says price and quantity demanded move in opposite directions, so the demand curve slopes downward. Behind it sit the substitution effect (a pricier good gets swapped for alternatives), the income effect (a higher price shrinks purchasing power), and diminishing marginal utility.
Demand shifts when a non-price determinant changes: tastes, income, prices of substitutes or complements, expectations, or the number of buyers. Higher income shifts demand right for normal goods but left for inferior goods; a substitute's price rising shifts demand right, a complement's price rising shifts it left.
A change in the good's own price never shifts its demand curve — it causes a movement along the curve, called a change in quantity demanded. Mixing up those two phrases is a fast way to lose an FRQ point.
Key terms for 1.4
Drag the curves yourself — the fastest way to make 1.4 stick.
Shifting the demand curve when the good's own price changes. Own-price changes move you along the curve (change in quantity demanded); only the non-price determinants shift the curve itself.
Get AP Econ exam tips in your inbox
Occasional emails with study tips, new interactive graphs, and exam-season reminders. Free — no spam.
No spam. Unsubscribe anytime.