Understanding Demand and Supply in Business Economics

Contemporary
Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Understanding Demand..........................................................................................................3
Understanding Supply............................................................................................................7
TASK 2............................................................................................................................................9
Emerging theories and models in 21st century contemporary economics.............................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business economics is a field of applied economics theory and concepts in regard of
financial, organizational, market related as well as atmosphere issues faced by entities. It
includes subject like scarcity, product elements, distribution as well as consumption. Demand as
well as supply both are important concept of economics that supports in dynamics of market
behaviour (Clegg, Geppert and Hollinshead, 2018). This report based on the H&M which is a
retail sector organisation and provide fashion brands and clothing. In this report consist of
demand and supply movement and emerging theories of economics.
TASK 1
H&M is a retail company in the business of Fashion brands and clothing. Having its
original establishments in Sweden, the brand is not limited to a single country only but
operational worldwide, from Latin America to South-East Asia. The range of market that
company serves are also huge. There are many brands seen who have a business of swerving
specific segments of markets. But H&M went beyond it and have a vision to offer best quality
clothes to Men, Women, Teenager and Children. Also, to cater demands of consumers a little
ahead, company also have a vision of offering ethnic and traditional wears as well.
As H&M is serving a wide range of market worldwide, it can be easily understood that its
markets complexities would be much larger, like any other brand serving wide markets and
operating in global chain order. Thus for getting a comprehensive insight about business trends
in H&M report have used economic concepts of Demand and Supply.
Understanding Demand
Demand in the market can be defined as the quantum of a commodity that consumers in
the market are willing to buy, desiring for and willing to pay as well. Willingness to pay for a
particular product, like clothes in case of H&M, is important to establish demand in market
because if consumers are willing to pay for clothes of H&M, for any reason, then there will not
be any demand but a mere desire of people. The graphical representation of demand in market is
made by Demand curve. Demand curve reflects demand of particular commodity in market at a
given price in different intervals of time. Demand in the market is a concept of micro-economics
and thus it is studied in respect of each firm separately, because every firm have their own
products in market which are offered to particular segments of consumers in different markets

and therefore there are particular consumer segments for each firm where demand of their
products is seen established (Simon, 2019).
In case of H&M, demands of its products is playing role in various market segments
because of the wideness of consumer segments that company serves. H&M have their products
in Men, Women, Children and Teenagers as well, where demand for H&M products are
differentiated. It is possible that in market of Women, products are performing well than any
other market and thus demand in that market would be higher of course than others. Therefore,
demands varies in consumer segments as well and not just at the level of firms.
However, it is not like that once a demand of products generated in market remains
constant for future as well and never gets affected. Like, if H&M have generated goodwill of its
products in market of Women wears than it will not be increased or decreased in future. There
are fluctuations that occurs with time and many other factors. The most important factor I
affecting demands of product is the price of product. In concepts of microeconomics there is seen
inverse relationship between price and demand. This means that consumers starts demanding less
for products if prices of products increase and starts demanding more if prices decrease.
However, this happens only when other factors in market are constant. There comes time, when
demand increases or decreases not because of price but due to other actors in market. In this case
demand is seen affected even when prices are constant. The report have made analysis of each
condition separately (Kliestik and et.al, 2020).
Movement along Demand curve
This concept reflect the increase and decrease in demand and is reflected over the graph
in a manner where demand point over the curve is seen moving along the curve itself. Also,
under this concept changes in demand are solely bought by the prices of products. For example,
like right now in market, clothes of H&M are being strongly demanded by consumers. This is
because consumers are perceiving that prices are reasonable. If H&M make rise in prices of
clothes suddenly, beyond expectations of consumers. There are chances that consumers will
make a shift towards other brands.