Microeconomics · Unit 2: Supply and Demand · 14 min read · Updated 2026-05-11
Demand — AP Microeconomics
AP Microeconomics · Unit 2: Supply and Demand · 14 min read
1. Core Definition of Demand★☆☆☆☆⏱ 3 min
Demand is the foundational concept of AP Microeconomics Unit 2, which makes up 18-20% of total AP exam score. It is a building block for equilibrium analysis, consumer surplus, elasticity, and most other microeconomic topics tested on both MCQ and FRQ.
Two standard notations are commonly used for demand:
Q_D = c - dP
This is *direct demand*, which expresses quantity demanded as a function of price. For graphing (with price on the vertical axis), we use inverse demand:
P = a - bQ_D
Demand can be presented as a table (demand schedule), a graph (demand curve), or a mathematical function, and is categorized as individual (one consumer) or market (all consumers in a market).
2. The Law of Demand and Quantity Demanded★★☆☆☆⏱ 4 min
The **Law of Demand** is the core principle of this topic: holding all other factors constant, there is an inverse relationship between a good's own price and its quantity demanded. When price increases, quantity demanded decreases; when price decreases, quantity demanded increases.
This inverse relationship (which gives a downward-sloping demand curve on a standard graph) comes from three complementary sources:
Substitution effect: Higher prices make consumers switch to cheaper substitute goods
Income effect: Higher prices reduce consumers' real purchasing power, so they buy less
Diminishing marginal utility: Each additional unit of the good gives less extra satisfaction than the last, so consumers will only buy more if price falls
Exam tip: Always separate the terms 'demand' and 'quantity demanded' on FRQs. AP graders routinely dock points for using these terms interchangeably, as the distinction between the two is the most heavily tested concept in this topic.
3. Movements Along vs Shifts of the Demand Curve★★★☆☆⏱ 4 min
The most frequently tested distinction on AP Micro demand questions is between a movement along the existing demand curve and a shift of the entire demand curve. The rule is simple: *only a change in the good’s own price causes a movement along the demand curve*. This movement represents a change in quantity demanded, not a change in the overall relationship between price and quantity.
A shift of the entire demand curve (a change in demand) is caused by a change in one or more non-price determinants of demand. A right shift means demand increased (quantity demanded is higher at every price), and a left shift means demand decreased (quantity demanded is lower at every price).
Exam tip: For any MCQ asking if a change is a shift or movement, first check if the change is to the good’s own price. If yes, it is a movement, and you can immediately eliminate all shift options to cut your work in half.
4. Individual vs Market Demand★★★★☆⏱ 5 min
Individual demand describes the quantity demanded by a single consumer at each price, while market demand describes the total quantity demanded by all consumers in the market at each price. To get market demand for private goods (the standard case in Unit 2), you calculate the **horizontal sum** of all individual demand curves: for any given price, add up the quantity demanded by each individual consumer to get the total market quantity demanded.
This is different from vertical summation (used for public goods), where you add prices instead of quantities — this is a common source of error on AP exams. Because some consumers will drop out of the market at higher prices (they will not buy any units when price exceeds their maximum willingness to pay), market demand is often a piecewise function, which is explicitly tested on AP FRQs.
Exam tip: Always write the full piecewise segments for market demand, even if the question doesn’t explicitly ask. AP FRQs almost always award an extra point for correctly accounting for consumers that drop out at high prices.
Common Pitfalls
Why: Students confuse the definition of demand (the entire price-quantity relationship) and quantity demanded (a single point on the curve)
Why: Students mix up normal and inferior good definitions, forgetting the direction of shift for inferior goods
Why: Students confuse private good market demand with public good demand, which uses vertical summation
Why: Students misremember what the law of demand describes, confusing non-price determinants with the core price-quantity relationship
Why: Students remember Giffen goods are an exception to the law of demand and over-apply the exception