BM533 Contemporary Economic Analysis

BM533 Contemporary
Economic Analysis

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1. Give an explanation of the law of demand, how the demand curve moves, and the variables
that influence how the demand curve evolves........................................................................3
2. Give a succinct explanation of the law of supply, the movement along the supply curve, and
the variables that affect and cause changes to the supply curve.............................................7
TASK 2..........................................................................................................................................12
1. Compare and analyse the various economic theories of 21st century contemporary
economics and the theories of 20th century to the modern business practises. ..................12
CONCLUSION .............................................................................................................................14
REFERENCES .............................................................................................................................15

INTRODUCTION
Demand and supply are two of the most essential concepts of economics. They build for
the base of the law of demand and supply which define the quantity demanded and supplied in
the market at different market situations (An, 2020). In this report an explanation of the
economic laws of demand and supply are explained briefly to give an overview of the concepts.
The company taken in the report to assist in the explanation of these economic concepts is Marks
& Spencer. There is an explanation for the different changes along the demand and supply curves
of Marks & Spencer in the form of movement and shift along the curve. The various factors
which affect the demand and supply curve and cause movement and shift in the demand and
supply curves of the company taken are also mentioned. Further in the report, few of the
emerging theories and models of the 21st century contemporary economics are also mentioned
and compared with those of the 20th century models.
TASK 1
1. Give an explanation of the law of demand, how the demand curve moves, and the variables
that influence how the demand curve evolves.
Demand: It is the inclination of people to buy products and their willingness to pay a certain
price for a given object or service. When it comes to demand, a price hike causes a fall in
product demand and conversely, all other things being equal.
Law of demand:
In accordance with the law of demand, a rise in a product's or service's price causes a drop
in demand for such merchandise or service, all those other things being equal. The law is based
upon the most crucial needs of consumers and the respective demand of those customers for
those products and services which fulfil these demands. According to this law, price and demand
are inversely related to each other (Byrne, 2018). Thus, when a product's price increases, demand
decreases, and when a product's price decreases, demand increases.

Changes in demand curve: It refers to the changes that occur in the demand curve due to
various factors relating to the product including the price of the product. The other factors
include price of substitute goods, availability of substitute goods, consumer income and tastes
and preferences of the customers. Mobility and transition in the demand curve are the two
distinct methods that the demand curve changes. A shift in the demand curve causes certain
fundamental changes in the demand and supply of the products, which have an impact on the
amount demanded at a similar price. A movement is induced by changes in the product's price
(Conroyand et.al., 2022).
Factor affecting demand and causing drive alongside the demand curve:
The mobility along the demand curve takes place solely due to the changes in the price of
the products and is correspondingly recognised as modification in quantity demanded. This
happens as the quantity demanded for a product in the market changes with the change in the
Illustration 1: Demand curve for Marks and spencer for Women wear range