Wireless earbuds are sold by many competing brands in a country's electronics market. (a) Define the term demand. [2] (b) State two determinants of demand, other than the price of wireless earbuds themselves, that could cause the market demand curve for wireless earbuds to shift…

Answer: ((a)) Demand is the willingness and ability of consumers to buy a good or service at a given price, over a given period of time ((b)) Any two of: the tastes and preferences of consumers; the price of related goods (substitutes or complements); the income of consumers; the number of buyers in the market; consumer expectations of future prices ((c)) Since wireless earbuds are a normal good, the rise in incomes means consumers are now willing and able to buy more earbuds at every price, so the market demand curve for wireless earbuds shifts to the right (demand increases). The fall in the price of a substitute, headphones, m…. Part (a): Defining demand Demand is the willingness and ability of consumers to buy a good or service at a given price, over a given period of time. Both parts of the definition matter: a consumer might want a pair of wireless earbuds, but…

IGCSE Economics 0455: Determinants of Demand and Shifts of the Demand Curve

Part (a): Defining demand

Demand is the willingness and ability of consumers to buy a good or service at a given price, over a given period of time. Both parts of the definition matter: a consumer might want a pair of wireless earbuds, but if they cannot afford them at the current price, this does not count as demand in the economic sense.

Part (b): Determinants of demand

Besides the price of wireless earbuds themselves, the market demand curve for wireless earbuds could shift because of a change in:

the tastes and preferences of consumers. For example, earbuds becoming more fashionable or more strongly associated with a particular lifestyle
the price of related goods. A substitute such as over-ear headphones, or a complement such as smartphones

(Other acceptable answers include consumer income, the number of buyers in the market, or expectations of future price changes.)

Part (c): Explaining the two separate shifts

Both events change something other than the price of wireless earbuds themselves, so both cause shifts of the demand curve rather than movements along it.

Event 1: the rise in incomes

Wireless earbuds are stated to be a normal good, so as consumer incomes rise across the whole country, buyers throughout the market are willing and able to buy more wireless earbuds, of any brand, at every price than before. This is a change in a determinant other than price, so the market demand curve shifts to the right: demand has increased.

Event 2: the fall in the price of a substitute

Over-ear headphones are a substitute for wireless earbuds, they satisfy a similar want. When headphones become cheaper, some consumers who would otherwise have bought earbuds switch to buying headphones instead. This means fewer wireless earbuds are demanded at every price than before, so the market demand curve shifts to the left: demand has decreased.

Final answers

(a) Demand $=$ the willingness and ability of consumers to buy a good or service at a given price over a given period.
(b) Any two of: tastes and preferences; the price of related goods; consumer income; the number of buyers; expectations of future prices.
(c) The rise in incomes shifts the demand curve for earbuds right (an increase, since earbuds are a normal good); the fall in the price of the substitute headphones shifts the demand curve for earbuds left (a decrease).