Impact on Economy and Its Business Environment - Report
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Added on 2020-06-04
Impact on Economy and Its Business Environment - Report
Added on 2020-06-04
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BUSINESS ECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1.1 Economic problem of scarcity and demand resource allocation........................................1P1.2 Role of supply and demand and equilibrium in an economy..............................................1P1.3 Evaluating importance of different market system ............................................................2P1.4 Evaluating role of opportunity cost in decision making.....................................................3P1.5 Elasticity of demand and its importance in market interaction...........................................3TASK 2............................................................................................................................................4P2.1 Implications of pricing and corporate objectives on its operations....................................4P2.2 Method of setting prices in different market structures......................................................5P2.3 Impacts of market structure and operating decisions on the behaviour of organisation.....5P2.4 Impact of UK regulations on Tesco....................................................................................6TASK 3............................................................................................................................................6P3.1 Analysis of change in structure of UK economy................................................................6P3.2 Various available tools to meet macroeconomic policy.....................................................7P3.3 Impact of success of UK policies in achieving macroeconomic objectives on Tesco........8P3.4 Evaluating performance of UK economy in global market................................................8TASK 4............................................................................................................................................9P4.1 Theory of comparative advantage.......................................................................................9P4.2 Advantages and disadvantages of Free trade and affects of globalisation........................10P4.3 Impact of emerging economies on the development of economies..................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONUK is a highly developed economy with number of industries. It fifth largest economy inworld that is mainly market oriented. In the context of GDP, UK contributes 3.9%of world totalGDP. It is on the 10th position in exports and on 5th position in imports. The report is based on theimpacts on economy on its business environment. Tesco which is a retail grocery store based inGermany has been taken as an example for the better understanding of this report. All theeconomic conditions of UK has been discussed along with the impact of emerging economieslike BRICS on the economy of UK.TASK 1P1.1 Economic problem of scarcity and demand resource allocationThe major task of any economy is production of goods and services to meet the demandsof people of the country. Main problem is that, what types of goods to be produced, how toproduced and for whom to produce. There should be an equilibrium price between the demandand supply of goods and services. If this price will not there then demands of the people willincrease day by day and there would be no resources to fulfil their demand. Unavailability ofany commodity means scarcity. The resources are very scare and demand is increasing day by day. These resourcesinclude land, labour and capital (Acs, and Carlsson, 2012). Scarcity of resources is directlyaffected by demand it means to meet the demand of the people the economy needs moreresources. The Tesco should use the existing resources to fulfil the demands of people. The main problem that Tesco is facing is continuous changing of technology and for thatit need resources to upgrade their system in the economy. They should maintain a balancebetween the demand and resources that they are using and also they should use their manpowerand other assets effectively and efficiently to satisfy the increasing demands of people. P1.2 Role of supply and demand and equilibrium in an economyTwo major factors that affects economy is its demand and supply. These both aredependent on each other it means that if the demand increases the supply will also increase and ifthe demand decreases the supply also decreases. On the contrary in demand lower the price,1
higher will be demand and higher the price, lower will be demand (Demand and supply. 2017).On the other hand, in supply higher price, higher will be quantity supplied and lower price, lowerwill be quantity supplied there. In any economy the equilibrium price is determined by thedemand and supply of the goods. This means demand and supply are equal and needs of the people are being met. Tescoshould be able to do this properly meeting its demand and supply of the products by determininga price at which the equilibrium can be achieved. If the demand and supply are not controlled inthe Tesco then there can never be equilibrium price in Tesco. If the demands are not met theprices can be increased. Therefore, there should be a proper balance between them. Illustration 1: Equilibrium pointP1.3 Evaluating importance of different market system Perfect competition-: a market where there are many buyers and sellers and the price isdetermined by the industry. No single seller has the power to determine the price. It is very easyto enter in the market as there are no big sellers (Audretsch, Hülsbeck and Lehmann, 2012). Themain important part of the market is all the products are sold at same price and any increase inthe price will lead to loss of customers. Monopoly: only a single seller is there and the buyers are in large numbers. The importance ofthis market is that the seller have a full control on the market and its price. It is helpful for largefirms which are already doing business. They do not have to depend on other firms for takingany decision. 2
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