Business Economics - Contemporary Business Economics

This report analyses the law of demand and supply and change in demand and supply. It also compares and contrasts emerging theories and models in 21st century contemporary economics with those of the 20th century, and relates both of these to modern business practices.

Contemporary Business
Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Explain the law of demand, movement along with the demand curve and change in the
demand curve with the help of appropriate diagram. ............................................................3
1.2 Explain the law of supply, movement along with the supply curve and also explain change
in supply curve with suitable diagram....................................................................................6
TASK 2............................................................................................................................................8
Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these to modern business practices..........8
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................13
Analyse the impact of macroeconomics issues of British company in comparison to other
country..................................................................................................................................13

INTRODUCTION
Business economics is study of scarcity of resources and their implication for the
production, financial organizational, environmental issues and market-related by the
corporations. This also emphasis on problem-solving and also taking the appropriate decisions
with the help of economics. British Gas Company is the chosen organisation for this report, It is
an energy and home services provides across the United Kingdom. The company is founded in
1997 and Chris O'Shea is the chief executive of the company. This report will analyse the law of
demand and supply and change in demand and supply. This also access the factors affecting
demand and supply in the market. Furthermore, it will analyse the certain theories of
contemporary which are emerging in 20th and 21st century.
TASK 1
1.1 Explain the law of demand, movement along with the demand curve and change in the
demand curve with the help of appropriate diagram.
Law of demand
It is a principal of economics which says that at high price consumers will demand less
quantity of product. And it is traced from the law of diminishing marginal utility. In context to
British gas company it can be see two scenarios. First is the “steady state” in this high gas
demand toward 2035, with some energy efficiency gains, but with the continue usage of both
heating and power generation. Second is the “Two degree” scenario it has lowest gas demand ,
where gas use is reduced to meet emissions reduction targets .
 Price of the commodity: With rise in price there will be a shift in demand curve and
with high prices demand for this particular gas company there will be downward sloping
and if they decrease the price of gas there will be upward sloping in curve. As per the
given diagram, it is shown that when the prices of the goods tends to rise then the demand
for gas decreases as the customer will not able to buy the gas in their available budget.
 Price of substitutes goods: These are the positive commodity in nature as price for
substitute gas increases then demand of own gas will also rise and if the different gas
company has lowered their price then there will be a decrease in own gas demand too.
When the prices of substitute goods decreases then they are having changing in the

demand of the given goods due to its prices which is also leading to have better approach
in the market.
 Income of the consumer: When the available income of the consumer increases then the
need for the average goods also increase but demand for the indifferent goods decreases.
On other hand, when the income of the consumer falls downs then the demand for normal
goods also decreases and request for inferior goods increases, other factors remain
changeless. These are the aspects which is having the consideration by which they can
rightly gain the appropriate results within the organisation.
 Change in preference:When the preferences of the consumer are in favour of the given
quality of gas then the demand for the British gas increase. While preferences of the
consumer are not in favour of gas then demand for such decreases. When the preferences
of the customer are in favour of the company then the demand of such goods in the large
market which is also leading to increase the overall sale of the company and vice versa.
As per the curve, when the price of commodity increases form the prices p3 to p2 then
its quantity demand also comes down from Q3 to Q2 and then move to Q3. On other hand, when
the price of of the commodity from P2 to P3 then the demand for such goods increases from Q2
to Q3.
Effects of rise in demand for this British gas company are as follows:

 An increase in demand will cause rise in equilibrium price and quantity of gas.
 Excess need will end the price to rise and as rates increased producers are eager to sell
even more.
Change in demand curve
It refers to the change in the entire demand curve that affect the whole curve and there is
shift to the left or to right, with rise in price demand goes down and with fall in price the demand
tends to rise as the consumer will not buy the products at higher prices. On other hand, when the
prices of the goods tends to fall down then the demand of such goods increases as the buyer will
always love to buy affordable goods.
In given figure, the initial demand curve D0 shifts to become either D1 Or D2. With rise
in price the demand will go to D0 to D1 and with decrease in price D0 will go to D2 because
when prices are high demand is always less and when prices are lowered then demand will rise.
It can be a causes by the change in the financial gain, preferences, price of utility or
complement goods or change in the future prospect..
Price Equilibrium
Equilibrium is that point where the market supply and demand are at a common point and
the consumer and producer both agree in that situation . When the demand for goods is

increasing then the suppliers also tends to supply that amount of goods so that they can balance
the curve and come at equilibrium point. In context with British gas company, when the demand
of gas is rising and the supplier is also supplying the amount of gas required they will be on a
equilibrium point.
1.2 Explain the law of supply, movement along with the supply curve and also explain change in
supply curve with suitable diagram.
Supply is the concept which defines the availability of goods t be sold in the large market
and also having the consideration of getting higher profitability in the target market. This is
basically related to the total available amount at the particular prices as given in the diagram.
Law of supply
This law state a positive relationship between quantity supplied and give price of a
commodity in large market while other factors remain constant. If the price of the goods increase
them supply of the goods also increased as the supplier wish to sell their goods at a high price
which help them to ensure a high level of profitability in large market. In relation to the British
Gas Company, if the price of gas tend to increase then in this case the supplier will sell more
quality to have more profit.
From this diagram, it shown that there is a upward sloping of supply curve due to the
positive relation between price and quantity supplied of specific product in large market. In this
illustration, when price of commodity was at the p3 then supplying also was at q3 but when the

change in price of goods tend to rise then the price of product from p3 to p2 that show a rise in
the supply of commodity from q3 to q2 as supplier also lead to more supply.
Factors affecting supply of the specific good are as follows:
 Costs of production: In British Gas Company, if it offer any level of the production then
it affect because of insufficient demand of the employee's low wages and raw material.
When the production cost tends to decline then it will lead in reduction of the overall
product's cost. In context of British Gas Company, when it have insufficient raw material
in this case, it will reduce overall supply of its gas.
 Government Subsidies: The rise in government subsides will leads to a reduction in cost
of the goods. Due to this, with the rise in the price of subsidies there will be a rise in
supply of the goods. The tax rate also can decrease supply of given product.
 Technology: It is the advancement and innovation in the technology that help a firm to
reduce its operating cost. With this consideration the organisation uses innovative
technologies. The use of latest technology by the company lead to an enhancement in the
supply of commodities due to a reduction in overall company's cost.
 Objectives of firms: If a firm work with the motive of earning more profit then in this
case they only sale its product as a high price. Whereas if the company consider social
welfare then they emphasis to sell their goods irrespective of their price.
Change in Supply Curve:
It state that there is a shift in entire supply curve due to the changes in different factors
that impact overall supply of a given commodity. It include production cost, technology and
taxes. When supply of the commodity rise then supply curve will shift from s0 to s1. While, if
the supply of goods tend to decline the this supply curve will shift from the s0 to s2.

According to this diagram, with the rising of commodity's price the supply of that good
will also rise. It implied that the supply curve will be shift from s to s1 and price of commodity
decline then the supply of specific good will be fall down because of a low price in market.
TASK 2
Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these to modern business practices.
Contemporary economics includes the various theoretical along with the effective
research fields of accounting, economics, management wit the full contribution with the impact
to develop the disciplines. In context to British Gas Company, the higher level authority or the
managers are using certain theories and the concept with the modern practices. In context to
various theories which are emerging theories and the certain concepts in the modern practices are
given below:
Traditional Economic Theories
Neoclassical theory: The respective theory is developed on the consideration of Carl
Menger, Leon Walras. The key emphasis of this theory is related to the supply and demand as
these are the driving forces behind, pricing, production and the fuller fuller utilisation of the
resources and the commodities. In context to British Gas Company, this theory states that taste
and preferences of the company is different and they are having integrated demand in relation to

the current consumption as the individual have the certain assumption of the gas and this is also
considering the overall organisation model.
Keynesian Economics theory
It is the theory that is working on the basis of certain assumption that the prices of the
goods and the wages of the employees are fixed as it is having the certain consideration in order
to ensures effective working. The first aspects is the aggregate demand which can be influenced
by certain decisions which are taken by the private organisations and having direct impact on the
overall profitability and the macroeconomics outcomes which also includes the reduction in
consumer spending during the high recession period. Other is related to the prices and the wages
which is having the slow respond to the change in the various aspects which is related to the
given goods. The last aspects is the aggregate demand which can be anticipated or unanticipated
that is having direct impact during the employment and prices.
Contemporary Economic Theories
Behavioural theory: It is the aspects that is basically given by the Richard Thaler and it
is having the certain combination of the psychology and the economics by which they can rightly
understand and the reason for the particular behaviour given by the people as they are living in
the real world. In context to British gas company can rightly analyse the employee's behaviour in
relation to the behaviour of the employees as this is helpful in making the effective
communication benefits. During pandemic, this is the theory which is basically used by the
people who is aiming to reduce the overall cost which is being spent on big data.
Nudge theory: It is the economical concept which is having the indirect suggestion with
the effective enforcement in order to reflect the behaviour of the individual for taking better
decisions. In relation to British gas company, they are taking the main consideration of taking
better results and they can be applied nudge theory so that they can understand the environment
so that they can have the automatic cognitive processes for having the better results. During the
pandemic, they can rightly use this theory so that the manager can rightly use the people with
more control for taking better decisions and majorly for their financial consideration.
Comparison and Contrast of Traditional and Contemporary Economics Theories
There are various aspects which shows the certain contemporary economics theories in
context to British gas company is given below:
Compariso Traditional economic theories Modern economic theories

n basis
Keynesian
Economics
theory
Neoclassical
theory
Behavioural theory Nudge theory
Objective When taking
about British gas
company, they
are working with
the sole aim of
using this
Keynesian
economics by
which they can
rightly establish
their principles
which says that
prices and the
wages are fixes
so that they can
rightly work in
the changing
business
environment.
It is the theory
that is being
used to have the
emphasis on the
supply and
demand of the
given goods as
these are the
driving forces in
relation to the
production with
the effective
consumption of
the
commodities.
The sole objective of
the behavioural
theory of British gas
company evaluates
the how the
consumer react and
behaviour by which
they can behave in
appropriate manner.
In context to
pandemics, this
theory can helps the
managers to
emphasis on how the
consumer behaviour
that is being
reflected while they
are making
purchase.
This is the theory
that can be used in
British gas
company of
having effective
shape in the
market that is
selected by the
person over other.
Implicatio
ns
In context to
British gas
company, they
are using this
theory which
also helps in
fixing prices and
wages are fixed
British gas
company is
using this theory
which also helps
in having better
productive
aspects in order
to earn income
. This theory helps in
understanding the
appropiate decision
by using this theory,
basics decisions can
be made and the
certain decisions of
making them.
Nudge theory
made in managing
the variation in the
company and also
assisting the
employees to take
better decisions &
thinking at British

by which they
can have the
better approach
in the market.
by producing
more units.
gas company.
CONCLUSION
From the above report, it is concluded that there are various organizations which are
operating in the economy demand and supply are two wheel that can maintain the effective flow
of goods & services in the large market. On the basis of economic expectation, organisation can
drive decisions related about the kind of goods to produce and how many workers to employ and
how the prices that need to be pay. There are certain theories of 20th and 21st century that is
Keynesian Economics theory Neoclassical theory, Behavioural theory and Nudge theory which
are contributing to the growth of the organization. .

REFERENCES
Books and Journals
Berghoff, H., 2020. Immigrant Entrepreneurship: A Typology Based on Historical and
Contemporary Evidence. In Oxford Research Encyclopedia of Business and
Management.
Bitzenis, A. and et. al., 2021. Modeling Economic Growth in Contemporary Greece.
Davis, R. and et. al., 2020. Industrial artificial intelligence, smart connected sensors, and big
data-driven decision-making processes in Internet of Things-based real-time production
logistics. Economics, Management and Financial Markets, 15(3), pp.9-15.
de Cavalcanti Mello, G.M. and Braga, H.P., Wealth and Poverty in Contemporary Brazilian
Capitalism.
DeBacker, J.M. and Routon, P.W., 2021. A culture of despair? Inequality and expectations of
educational success. Contemporary Economic Policy, 39(3), pp.573-588.
Lu, L., Cai, R. and King, C., 2020. Building trust through a personal touch: Consumer response
to service failure and recovery of home-sharing. Journal of Business Research, 117,
pp.99-111.
Lunding, J.A., Ellersgaard, C.H. and Larsen, A.G., 2021. The established and the delegated: The
division of labour of domination among effective agents on the field of power in
Denmark. Sociology, 55(1), pp.110-128.
Martins, N., Dominique-Ferreira, S. and Pinheiro, C., 2021. Bridging tourism, architecture, and
sustainability: Design and development of an app for contemporary architecture built in
Portugal. Journal of Global Scholars of Marketing Science, pp.1-18.
Outlaw, D., Smith, A.H. and Wang, N., 2021. The Implications of Contemporary Research on
COVID-19 for Volatility and Portfolio Management. The Journal of Portfolio
Management, 47(9), pp.159-177.
Outlaw, D., Smith, A.H. and Wang, N., 2021. The Implications of Contemporary Research on
COVID-19 for Volatility and Portfolio Management. The Journal of Portfolio
Management, 47(9), pp.159-177.
Pankevych, I., Constitutional Guarantees for Ownership Rights and the Development of the
Market Economy. In Dynamic Elements in the Contemporary Business Law (pp. 251-
266). Societatea de Stiinte Juridice si Administrative.
Popescu, G.H. and et. al., 2020. Industrial big data, automated production systems, and Internet
of Things sensing networks in cyber-physical system-based manufacturing. Journal of
Self-Governance and Management Economics, 8(3), pp.30-36.
Ratten, V. and et. al., 2020. The journal of family business management: a bibliometric analysis.
Journal of Family Business Management.
Raza, A. and et. al., 2021. Corporate social responsibility and employees' voluntary pro‐
environmental behavior: The role of organizational pride and employee engagement.
Corporate Social Responsibility and Environmental Management, 28(3), pp.1104-1116.
Scott, R. and et. al., 2020. COVID-19 response and recovery in smart sustainable city
governance and management: Data-driven Internet of Things systems and machine
learning-based analytics. Geopolitics, History and International Relations, 12(2), pp.16-
22.

Seifzadeh, M. and et. al., 2020. The relationship between management characteristics and
financial statement readability. EuroMed Journal of Business.
Stefanova, N., 2020. Achieving Competitiveness Through Innovative Human Capital
Management. SUSTAINABLE HUMAN RESOURCE MANAGEMENT IN THE
CONTEMPORARY ECONOMIC REALITY, pp.272-278.
Zaim, H., Demir, A. and Budur, T., 2021. Ethical leadership, effectiveness and team
performance: An Islamic perspective. Middle East Journal of Management, 8(1), pp.42-
66.
Zhang, H. and et. al., 2020. How social-media-enabled co-creation between customers and the
firm drives business value.
ZHANG, H.Y. and ZHANG, Z.T., A Dynamic Closed-Loop Integrated Model of Business
Structural Organization: Based on Knowledge Logic. Contemporary Finance & Economics,
(07), p.250.
APPENDIX
Analyse the impact of macroeconomics issues of British company in comparison to other
country.
AS due to the COVID-19. There are various impact of these issues on the business
organisation and these are given below:
 Economic growth: Due to the huge impact of covid-19, USA have the highest rising
case which is leading to have more deaths within the region where India is having the
some how less case as the comparison. This cause in unemployment and poor living
standards of life. The overall economic growth rate of the company decreases due to the
adverse impact of COVID.
 Quality of life: As the increasing cases in World, the British company is having the huge
lay-off due to the poor health and the various restriction on travelling by which various
industries gets shut down and this leads to lower down the overall productivity of

400
360
320
280
240
200
160
120
0 200 400 600 800 1000 1200 1400
1600
Quantity (…….. per week)
Figure1: Demand Curve for appendix 1
400
360
320
280
240
200
160
120
0 200 400 600 800 1000 1200
1400 1600
Quantity (…….. per week)
Figure 2: Supply curve – appendix 2
Price (£ per ……..)
D1
S1
E
Price (£ per ………)
S1 S2
P1

 employees.