Business Economics - Contemporary Business Economics

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: