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According to the law of demand, what happens as price rises?
Microeconomics is a core part of IB Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.
Key concepts
DemandQuantity buyers want at each price
SupplyQuantity sellers offer at each price
EquilibriumPrice where Qd = Qs
Consumer surplusAbove price, below demand curve
Producer surplusBelow price, above supply curve
Ceteris paribusAll other variables held constant
PED%ΔQd / %ΔP — sensitivity to price
PES%ΔQs / %ΔP — supply sensitivity
YED%ΔQd / %ΔY — sensitivity to income
XED%ΔQd_A / %ΔP_B — sensitivity to other price
Elastic|elasticity| > 1 — large response
Inelastic|elasticity| < 1 — small response
Perfect competitionMany firms, identical product, no power
Monopolistic competitionMany firms, differentiated products
What your exam board covers
Where Microeconomics sits in each exam board's specification. Tap a board to see what it lists.
HLUnit 2 — Microeconomics
- 2.1 Demand
- 2.2 Supply
- 2.3 Competitive market equilibrium
- 2.4 Critique of maximizing behaviour of consumers and producers (HL only)
- 2.5 Elasticities of demand (PED and YED)
- 2.6 Elasticity of supply (PES)
- 2.7 Role of government in microeconomics
- 2.8 Market failure — externalities and common pool resources
- 2.9 Market failure — public goods
- 2.10 Market failure — asymmetric information (HL only)
- 2.11 Market failure — market power and market structures (HL only)
- 2.12 The market's ability to achieve equity (HL only)
Source: IB Diploma Economics guide, accessed 23 June 2026.
SLUnit 2 — Microeconomics
- 2.1 Demand
- 2.2 Supply
- 2.3 Competitive market equilibrium
- 2.5 Elasticities of demand (PED and YED)
- 2.6 Elasticity of supply (PES)
- 2.7 Role of government in microeconomics
- 2.8 Market failure — externalities and common pool resources
- 2.9 Market failure — public goods
Source: IB Diploma Economics guide, accessed 23 June 2026.
LLearn Microeconomics step by step
Free interactive mini-lessons: short screens, worked examples and quick checks. Pick your exam board:
Common mistakes to avoid
Questions where students often pick the tempting wrong answer — make sure you know the right one:
According to the law of demand, what happens as price rises?✗ Demand rises with price. ✓ Quantity demanded usually falls.
What does a change in a good's own price cause?✗ A shift of the whole demand curve. ✓ A movement ALONG the demand curve.
What is market equilibrium?✗ Where supply is at its highest. ✓ Where quantity demanded equals quantity supplied.
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