Economics - Term 1 - Week 7

Imagine Thandi in Soweto with R30 to spend on lunch. She checks the price of kota (R20) and pizza (R50). She chooses kota because it fits her budget and she wants it. Demand is not just wanting something—it’s wanting it and being able to pay for it. In economics, demand means the quantity of a good or service that consumers are willing and able to buy at different prices over a certain period. Many learners think demand is just desire, but unless you have the money, it’s not economic demand. Always remember: demand = desire + ability to pay. This is why a new iPhone might be popular, but only a few can actually buy it in Mthatha or Polokwane. When you see long queues for a new sneaker release in Durban, that's demand in action—people want the product and have the cash to buy it, not just wishful thinking.

Sipho travels from Khayelitsha to Cape Town CBD by minibus taxi. If the taxi fare drops from R25 to R15, more people—like Sipho’s friends—will choose to travel. This relationship between price and quantity demanded is shown by the demand curve. On a graph, price goes on the vertical (Y) axis and quantity on the horizontal (X) axis. The demand curve slopes downwards from left to right: as price falls, quantity demanded rises. A common mistake is to draw the curve upwards or swap the axes. Always check: price is vertical, quantity is horizontal, and the curve slopes down. For example, if the price of a Springboks jersey drops, more fans in Polokwane will buy one, and this can be plotted as a downward-sloping curve. Remember, the curve is not a straight line in most cases, but it always goes downwards.

During load-shedding in Durban, sales of candles and generators shoot up—even if prices stay the same. This is a shift in demand, not just a movement along the curve. Factors like consumer income, tastes, the price of related goods (like paraffin vs. candles), expectations, and the number of buyers can shift the entire demand curve. For example, when Bafana Bafana wins, more people buy soccer jerseys, shifting demand right. If petrol prices rise, fewer people use private cars, shifting demand for minibus taxis right. Many learners confuse a shift (the whole curve moves) with a movement (just sliding along the same curve). Remember: a shift means something other than price changed. For instance, if a new mall opens in Mthatha and attracts more shoppers, the demand for local taxis increases at every price, shifting the curve.

Step 1: List the data. Suppose in Soweto, at R30, 10 kotas are sold; at R20, 20 kotas; at R10, 30 kotas. Step 2: Draw axes. Price (Y-axis), Quantity (X-axis). Always label your axes clearly to avoid confusion. Step 3: Plot the points: (10, R30), (20, R20), (30, R10). Each point shows how many kotas are bought at each price. Step 4: Connect the dots with a smooth downward-sloping line. This shows the inverse relationship between price and quantity demanded. Step 5: Label the curve 'Demand for Kota'. Final answer: The demand curve slopes down, showing as price decreases, quantity demanded increases. Check: The curve is not flat or upward; the axes are correct and all points are plotted accurately.

Step 1: Read the scenario. During load-shedding, candle sales in Durban rise from 50 to 100 per day, even though the price stays at R10. Step 2: Ask: Did price change? No, the price remained constant. Step 3: Identify the cause. Load-shedding increased the need for candles, so more people are buying them regardless of price. Step 4: Conclude: This is a shift in demand, not a movement along the curve. The entire demand curve moves to the right. Final answer: The demand curve for candles shifts right. Sanity check: If price didn’t change but quantity did, it’s a shift, not a movement along the curve.

Question: Lerato sells vetkoek in Mthatha. When she drops the price from R8 to R5, sales rise from 40 to 70. What happened? Let’s think: Did only price change? Yes. So, it’s a movement along the demand curve, not a shift. Worked response: This is an increase in quantity demanded, shown by moving down the demand curve. The only thing that changed was the price, so we move along the same curve. Now you try: If the price rises from R5 to R8 and sales drop from 70 to 40, what is this? Answer: A decrease in quantity demanded, movement up the demand curve. Only price changed, so it’s not a shift.

Question: After Banyana Banyana wins a big match, more people in Polokwane buy their jerseys at the same price. What happened? Let’s model: Did price change? No. Did something else change? Yes—popularity increased after the win. Worked response: This is a shift in demand to the right. More people want jerseys at every price, so the whole curve moves. Now you try: If a new health study says kota is unhealthy and fewer people buy it at the same price, what is this? Answer: A shift in demand to the left. The demand for kota decreases at every price, so the curve shifts left.

1. Define demand in your own words, making sure to mention both willingness and ability to pay. 2. List two factors (other than price) that can shift demand, such as consumer income or tastes. 3. State whether each is a movement or a shift: a) Price of bread drops, b) More people move to Durban. Give a reason for your answer.

1. Draw a demand curve using this data: At R15, 15 units; at R10, 25 units; at R5, 40 units. Label your axes and curve clearly. 2. Explain what happens to demand for umbrellas in Cape Town during a sudden rainstorm. Use the terms 'shift' or 'movement' in your answer. 3. Distinguish between a change in quantity demanded and a change in demand using your own example. Explain your reasoning.

1. Analyse how a rise in taxi fares during a fuel price hike affects demand for minibus taxis and private cars. Discuss both products. 2. Predict what happens to the demand for data bundles if a new free Wi-Fi service starts in Khayelitsha. Explain your answer. 3. Draw and label a graph showing both a movement along and a shift of the demand curve. Indicate which is which.

• The desire for a product, regardless of ability to pay
• The quantity of a product consumers are willing and able to buy at different prices
• The total supply of a product in the market
• The price consumers want to pay for a product

Answer: The quantity of a product consumers are willing and able to buy at different prices

Demand includes both willingness and ability to pay; just wanting something is not enough. Many confuse demand with mere desire.

• Demand shifts left
• Quantity demanded increases (movement down the curve)
• Demand shifts right
• Quantity demanded decreases (movement up the curve)

Answer: Quantity demanded increases (movement down the curve)

A price decrease causes movement along the curve, not a shift. Some learners wrongly pick 'shift right'.

• A decrease in the price of candles
• Load-shedding increases
• A decrease in consumer income
• The price of candles increases

Answer: Load-shedding increases

Non-price factors like load-shedding shift the curve. Price changes only cause movement along the curve.

• Quantity
• Income
• Price
• Time

Answer: Price

Price is always on the Y-axis. Learners often swap axes, so check your graph carefully.

• Demand for existing bundles shifts right
• Demand for existing bundles shifts left
• Quantity demanded increases
• No change in demand

Answer: Demand for existing bundles shifts left

Cheaper substitutes decrease demand for the original product, shifting the demand curve left. Many learners think the demand will increase, but when a better or cheaper alternative is available, demand for the old product falls at every price, not just at one price.