Factors Affecting Price of Bread and Economic Policies to Control Obesity in UK

Running Head: ECONOMICS
Economics
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1ECONOMICS
Table of Contents
Factors affecting price of bread in UK............................................................................................2
Demand, Supply Overview of Bread in UK................................................................................2
Determinants of demand..............................................................................................................3
Determinants of supply................................................................................................................5
Price determination in the market................................................................................................5
Economic policies to control obesity in UK....................................................................................8
Obesity in UK..............................................................................................................................8
Policies to control obesity............................................................................................................9
References......................................................................................................................................11

2ECONOMICS
Factors affecting price of bread in UK
In the form of free market economy price of a good is determined based on its demand
and supply condition. Demand of a good signifies ability of a person to buy the goods, which in
turn depends on the purchasing power of the person. The law of demand indicates an opposite
relation between price and demand and hence the demand curve usually slopes downward.
Supply on the other hand represent cost side of the market. The supply curve shows sellers’
willingness to supply in the market. The positive relation between price and supplied quantity
makes the supply curve positively sloped. The demand and supply forces act in the market to
determine price and quantity. To obtain a stable equilibrium supply and demand in the market
should match with each other. Once the price deviates from its original equilibrium position,
there is either excess supply or excess demand in the market. This excess supply or excess
demand cannot persist long in the market. Consumers and producers adjust their demand,
supplied quantity, and bring back the original equilibrium (Case, Fair and Oster 2014). In
presence of excess supply resulted from a price rise, buyers reduce their demand and this pushes
down the price towards equilibrium. With excess demand in the market generated from low price
suppliers restrict supply and price gradually goes up.
Demand, Supply Overview of Bread in UK
In UK, Bakery market is considered as one of the largest and important market for food
industry. The bakery industry in divided into three main sectors. The large baking companies, In-
store bakeries and high retail street bakers (ahdb.org.uk 2017). The large bakery suppliers
dominate the market in both value and volume terms. After large companies in-store bakery
suppliers occupy the second place. Lowest sales volume is observed for high street bakers. These
three sectors together control the supply of bakery in the market.

3ECONOMICS
Table 1: Shares of UK bread industry
(Source: ahdb.org.uk 2017)
Majority of British adults demand bread as their basis staple food. The sales of bread rose
to US dollar 9.03 billion in 2012 indicating a 0.13% increase in 2011 and from 5.3% in 2007.
With respect to value sales, the sector is projected to remain largest segment in the UK food
industry (bakeryinfo.co.uk 2017).
The demand and supply together determine the market price of bread.
Determinants of demand
Price: Price has direct influence on demand. There is a negative relation between price and
demand of a commodity. As price increases, given income the purchasing power decreases
leading to a rise demand. On the other hand, as price decreases purchasing power increases and
so is the demand. With rise in the price of bread, its demand increases and with decline in prices
bread demand rises (Hildenbrand 2014). Bread in UK is a price responsive good. This holds
price at the central position in determining purchase of bread. This gives new brands to enter in
the market where they can attract a significant share of consumers by offering a little price
incentive.