Economics - Term 1 - Week 8

Imagine Sipho in Khayelitsha deciding whether to take a minibus taxi to work. If taxi fares jump from R15 to R25, Sipho might walk or find a lift instead. This is demand in action: as price rises, people usually buy less. Demand is the quantity of a good or service that consumers are willing and able to buy at different prices. In South Africa, we see this every day with essentials like bread, electricity, or even Springboks match tickets. The demand curve shows this relationship on a graph: price on the vertical axis, quantity on the horizontal. The curve slopes downwards from left to right, showing that higher prices mean lower quantity demanded. Many learners mix up demand with quantity demanded. Remember: a movement along the curve (from one point to another) is a change in quantity demanded, caused by a price change. A shift of the entire curve means demand itself has changed, due to other factors.

Lerato in Soweto just got a part-time job at a local supermarket. With more money, she buys a kota for lunch every day instead of just once a week. This is the effect of income on demand. When people’s income increases, they usually buy more normal goods—like bread, meat, or airtime. But for some goods, called inferior goods (like cheap instant noodles), demand might fall as income rises because people switch to better alternatives. In South Africa, when the government increases social grants, spaza shops often see a spike in sales of basics. The demand curve shifts to the right when income rises (for normal goods), and to the left when income falls. Don’t confuse this with a movement along the curve: income changes shift the whole curve, not just the quantity at one price.

Ahmed runs a café in Polokwane. When load-shedding hits, demand for his generator-powered coffee spikes—even if the price stays the same. This shows how non-price factors affect demand. These include tastes and preferences (like a new Banyana Banyana win making soccer jerseys popular), the price of related goods (if pap gets expensive, people might buy more rice), and expectations (if people expect bread prices to rise, they buy more now). In South Africa, these factors can be sudden, like a heatwave increasing demand for cold drinks. Each of these shifts the demand curve left or right. A common misconception is that only price changes affect demand. In reality, many non-price factors can shift the entire demand curve.

Step 1: Collect price and quantity data. For example, at R10 per loaf, 1000 loaves are sold per day; at R15, only 700 are sold. Step 2: Draw axes. Label the vertical axis 'Price (R)' and the horizontal axis 'Quantity (loaves)'. Step 3: Plot the points: (1000, R10) and (700, R15). Step 4: Connect the points with a downward-sloping line. This is your demand curve. Step 5: Check your work. The curve should slope downwards, showing that as price rises, quantity demanded falls. This matches what we see in Durban bakeries. If you add more points, like at R12, 850 loaves, your curve becomes more accurate. Always check that your graph reflects the real-life trend: higher prices mean fewer sales.

Step 1: State the scenario. In Mthatha, social grants increase, giving families more income. Step 2: Predict the effect. More income means more demand for normal goods like maize meal. Step 3: Draw the original demand curve. Step 4: Draw a new demand curve to the right of the original, showing increased demand at every price. Step 5: Add numbers: If at R20 per bag, 500 bags were sold before, now maybe 650 are sold at the same price. Step 6: Sanity check. The shift is rightward, not just a movement along the curve. This means at every price, more maize meal is bought. This is a real shift in demand, not just a reaction to a price change.

Question: If the price of a minibus taxi ride rises from R12 to R18, what happens to the quantity demanded? Let’s think: Higher price usually means fewer people take the taxi. So, the quantity demanded falls—a movement up along the demand curve. Worked response: At R12, 800 people ride daily; at R18, only 500 do. This is a change in quantity demanded, not demand itself. Remember, only the price changed—no other factors. Now you try: If the price drops to R10, what happens? Answer: Quantity demanded increases—a movement down the curve, as more people can afford the ride. This is not a shift in demand.

Question: Ahmed notices that when salaries are paid, he sells more airtime. Why? Model: More income means people can buy more normal goods like airtime. This shifts the demand curve right. Worked response: The increase in income causes a rightward shift, not just a movement along the curve. At the same price, more airtime is sold. Now you try: What happens to demand for cheap candles when income rises? Answer: Demand for inferior goods like cheap candles may decrease—the curve shifts left, as people buy better alternatives.

1. Define 'demand' in your own words and give a local example from your community, such as how many people buy bread at your nearest spaza shop. 2. List two factors (besides price) that can shift the demand curve, and explain each with a South African example, like income changes or a Bafana Bafana win. 3. Draw a simple demand curve for cold drinks, label the axes correctly, and explain why the curve slopes downwards using a real-life scenario.

1. Explain with an example how income changes can affect demand for bread in your area, using numbers if possible to show before and after income increases. 2. Given: At R20, 200 loaves are sold; at R30, 120 are sold. Draw and label the demand curve, describe its slope, and explain what this tells you about consumer behaviour. 3. Describe what happens to the demand curve for soccer jerseys after a big Bafana Bafana win, and explain why this happens using the idea of changing tastes and preferences.

1. Analyse how load-shedding could shift the demand curve for generators in Durban, and predict what happens to sales and prices as a result. 2. Predict what happens to the demand for minibus taxi rides if petrol prices double, and explain your reasoning using the concepts of affordability and consumer choices. 3. Solve: If the price of rice falls and people buy less pap, what does this show about the relationship between rice and pap? Explain your answer in terms of substitutes and consumer behaviour.

• As price increases, quantity demanded increases
• As price increases, quantity demanded decreases
• As price decreases, demand shifts left
• As price decreases, supply increases

Answer: As price increases, quantity demanded decreases

A downward-sloping demand curve means higher prices lead to lower quantity demanded. Many confuse this with a shift in demand.

• A change in the price of the good itself
• A change in consumer income
• A movement along the demand curve
• A change in supply

Answer: A change in consumer income

Income changes shift the whole demand curve. Many learners mistake this for a movement along the curve.

• A shift in demand
• A change in quantity demanded
• A change in supply
• An increase in demand

Answer: A change in quantity demanded

This is a movement along the demand curve, not a shift. Many confuse this with a shift in demand.

• Fresh meat
• Luxury cars
• Cheap instant noodles
• Smartphones

Answer: Cheap instant noodles

Inferior goods are those for which demand falls as income rises. Cheap instant noodles fit this description.

• Price of cold drinks falls
• People's tastes and preferences change
• Supply decreases
• Income falls

Answer: People's tastes and preferences change

A heatwave makes cold drinks more desirable, shifting demand right. Many confuse this with a price change.