(HL Economics series) Top 3 misconceptions in Topic 1: Demand
(HL Economics series) Top 3 misconceptions in Topic 1: Demand
IB Lounge is proud to release our lost and found series where we cover the misconceptions that we as students faced and help them get back on the right track. Sadly, some of us did not realise we had these misconceptions till nearing the end of our IB journey. We hope this guide helps prevent possible panic near the examinations where you realise what you have been studying was wrong the whole time.
Casual or causal
For some of you reading this, you might be thinking “How can someone be so silly as to mistake causal for casual.” Well, it happens. I thought that the Law of Demand stated that there is a negative casual relationship between the price of a good and its quantity demanded over…. Yeah basically I thought it was casual instead of causal. My guess was this is due to a lack of paying attention in class plus our brains’ ability to interpret a certain string of letters as what we think it represents. P.s. this applies to the law of supply as well.
Reason why demand curves are downward sloping
Well it’s probably true that the lower the price of the good, the more people would want it. But, write that in your Economics essay and you might not get any marks. In fact, the marker would probably not believe you’re an Economics student. So what’s the real reason: Marginal benefits. Essentially the extra benefit consumers receive from each additional unit consumed increases by smaller and smaller amounts. Thus, consumers will be only willing to buy each extra unit if it has a lower and lower price. (It’s a progressive thing).
Movements along a demand curve VS shifts of demand curves
Man, was I confused by this. In laymen’s terms, isn’t a shift the same as as a movement? Isn’t moving the vase to the other end of the table the same as shifting it. Yes but unfortunately, it means different things in IB Economics.
Let’s go through it!
When the price of a good changes, ceteris paribus, it leads to a movement along the demand curve. → Change in quantity demanded
When a non-price determinant of demand changes, it leads to a shift in the demand curve. → Change in demand
Excuse the non-straight lines!
We hope this has helped you understand some of the common pitfalls students like yourself might have. If you know someone who doesn’t listen in Economics class, it might be worthwhile to send this resource to him/her. You might save him/her from a catastrophe. Then he might owe you a meal.
Win-win?
Let us know what other topics or subjects you want us to cover either through emailing us at ibloungesg@gmail.com or joining our Telegram group chat https://t.me/joinchat/BQuvaBeVoh6JFZaEYDeIgQ where you can ask IB graduates for advice!
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