Contemporary Business Economic: Analysis of Law of Demand and Supply, Comparison of Emerging Theories in 21st and 20th Century

This article discusses the law of demand and supply in contemporary business economics, using Boots as an example. It covers movements and changes in demand and supply curves, and compares emerging theories in 21st and 20th century economics. The article also includes a brief introduction to market structure and the company. The subject is Contemporary Business Economic (BM533) and the college/university is not mentioned.

BM533 Contemporary
Business Economic

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Analysing law of demand, movement along the same demand curve and changes in demand
curve with its factors....................................................................................................................1
2. Analysing law of supply, movements along the same supply curve and changes in supply
curve with its factors....................................................................................................................3
TASK 2............................................................................................................................................5
3. Compare and contrast emerging theories and models in 21st century contemporary
economics with those of the 20th century....................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Contemporary business economics are refers to the study of various issues related to
market, financial, organisational and environmental that exist in present time and faced by the
company in order to grow in the market in effective manner (Anadolu, 2020). For this project,
selected company is Boots that is a retailing company of UK. It is founded in 1849 by John Boot
and its headquarters is in Beeston, Nottinghamshire, England, United Kingdom.
The project cover description of law of demand, its movement in the same demand curve
and changes in demand curve with its factors. It further describe law of supply, movement in the
same supply curve and changes in supply curve with its factors. It also includes compare and
contrast of emerging theories and models in 21st century contemporary economics with 20th
century.
TASK 1
1. Analysing law of demand, movement along the same demand curve and changes in demand
curve with its factors
Boots is one of the largest retailing company of UK and Ireland. It provide its services in
many countries which includes United Kingdom, Thailand, Norway, Netherlands, Republic of
Ireland and Italy with the help of its Pharmaceuticals, Beauty, Healthcare and Photography. It
has maximum 2500 shops of health and beauty in United Kingdom and Ireland (Antonova,
2019). These shops are mainly located in shopping centres and on high streets. Its parent
company is Walgreens Boots Alliance and its subsidiaries is Boots Opticians.
Boots Baby Organic Cream is its one of the most demanded product in the market. For its
manufacturing they use more natural ingredients and less chemicals, pesticides, and other
harmful material in order to help parents to care its child skin in most effective manner. Its cost
is high because the material or ingredients are used in this cream are more expensive which
affects its demand in the market. But its organic nature also influenced more customer in order to
purchase them and help company for increasing their sales and profit in effective manner.
Market structure refers to the different classification of the market for different industries
and their different nature of competitions for their goods and services in the market. It classified
market in four type that is perfect competition, monopoly, oligopoly and monopolistic
competition. In context of Boots, market structure for its product Boots Baby Organic Cream is
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Oligopoly because there are small number of large companies are selling identical or
differentiated products in the market. It makes companies dependent on each other for
developing an effective marketing strategy.
Law of demand refers to the study of relation between price and quantity demanded in
the market. It states that price and quantity demanded has inverse relation with each if the price
of the price of the product is increased its demand decreased and if price of the product is
decreased its demand increased (Arcuri and Levratto, 2020). In respect of Boots, law of demand
help them to make effective pricing strategy in order to encourage customers in order to purchase
their product that is Boots Baby Organic Cream more. Factors that create movement in same
demand curve and changes in its demand curve are described below:
Movements in the same demand curve
When quantity demanded by the customer is changed by the changes in their price and
other things remain constant it makes movement in demand curve. There are two type of
movements in demand curve that is extension and contraction. In regards of Boots, these
movements in its product are described below:
Extension- It refers to the situation when the price of the product is fall their demand is
increased in the market. This create downward movement in the same demand curve of the
product (Assaker, 2020). In case of Boots, if the price of Boots Baby Organic Cream is fall then
its demand increased in the market and it cause downward movement in its demand curve.
Contraction- It refers to that situation when the demand of the product is decreased due
to rise in its price. It make demand curve to move upward direction. In accordance with Boots, if
the price of its product that is Boots Baby Organic Cream is rise then its demand decrease in the
market and it cause upward movement in its demand curve.
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Shifting in demand curve
It describes that if the factors affects the purchasing decision of customer for the product
instead of price, it create shifting in demand curve of the product. Various type of factors are
there which cause shifting or changing in demand curve. If these factors increased the demand of
the product, its demand curve shift rightward and if these factors cause decrease in its demand its
then its demand curve shift leftward. In account of Boots, factors that shift demand curve of
Boots Baby Organic Cream, are described below:
Tastes and preferences of customer- Demand of the particular product can be affected
because of taste and preferences of customer (Buzgurescu and Elena, 2020). In context of Boots,
if the taste and preferences of customer for Boots Baby Organic Cream is high then its demand is
also high, it makes demand curve shift rightward. If its taste and preferences is low then its
demand is also decreased which create demand curve to shift leftward.
Income of the people- It has great impact on purchasing power of the customer which
can increase or decrease the demand of the product. In respect of Boots, if the income of the
customer is increased then the demand of Boots Baby Organic Cream is also increased which
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Illustration 1: Demand curve
Source”https://www.quotemaster.org/
law+of+demand”

cause rightward shifting in demand curve. If income of customer decreased its demand are also
decreased which cause leftward shifting in demand curve.
Changes in Prices of the related goods- Prices of the related goods are also affects the
demand of the particular product in effective manner. In regards of Boots, if the price of related
product of Boots Baby Organic Cream is increased then its demand is also increased which
caused rightward shifting in demand curve. If the price of related goods decrease which cause
decrease in its demand and leftward shifting in its demand curve.
Advertisement Expenditure- It refers to those expenses which is needed by the
company in order to promote or advertise their product and services in effective manner
(Durmuş, 2020). In case of Boots, if its management expend huge amount for advertising its
product that is Boots Baby Organic Cream which create huge demand and shift demand curve to
rightward.
Number of Customer in the market- It also effects the demand curve of the product. In
accordance of Boots, if the number of customer in the market is low which cause decrease in
demand of Boots Baby Organic Cream and its demand curve shift leftward.
Consumers' Expectation with regards to future prices- It is also an main reason
which create shifting in demand curve. In account of Boots, if consumers' expectation for future
prices is high which cause increase in demand of Boots Baby Organic Cream and its demand
curve shift rightward.
2. Analysing law of supply, movements along the same supply curve and changes in supply
curve with its factors
Law of supply shows positive relation between price and supply of the product. It helps
companies in to take effective decision for the supply of their products in the markets. Supply
curve represents graphical form of supply of particular product and its price. In context of Boots,
factors and price of its product that is Boots Baby Organic Cream create movement and changes
in its supply curve are described below:
Movements along the same supply curve-
When the price of product changed, its supply is also changed and other thing remain
constant (Elgün, 2020). In respect of Boots, movements in supply curve of its product that is
Boots Baby Organic Cream are described below:
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Extension- When the price of Boots Baby Organic Cream is increased which makes
producer to increase its supply in order to earn maximum profit from it. This makes upward
movement in its supply curve.
Contraction- When the price of Boots Baby Organic Cream is decreased which makes
producer to decrease its supply in order to get safe for suffering huge loss. This makes downward
movement in its supply curve.
Shifting in supply curve-
Various types of factors affects the decision of producer in order to supply particular
product in the market (Sejfijaj and Shehu, 2020). In case of Boots, factors that cause shifting in
supply curve of Boots Baby Organic Cream are described below:
Technology- Technology are also affects the supply curve of the particular product. If
manufacture of Boots Baby Organic Cream used old technology then its supply decreased and
its supply curve shift leftward. If they improve technology which increase its supply and shift its
supply curve rightward.
Taxation- Taxation policy can also affects the supply curve of the particular product
(Fauzan and Balqiah, 2019). If tax on Boots Baby Organic Cream is high, its supply decreased
and its supply curve shift leftward. If tax on it is low, its supply increased and its supply curve
shift rightward.
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Illustration 2: Supply curve

Cost of factor of production- If the cost of factor of production of Boots Baby Organic
Cream is increased, its supply decrease and its supply curve shift leftward. If its cost of factor of
production is decrease, its supply increased and its supply curve shift rightward.
Weather condition- If there is a favourable weather condition which increase the supply
of Boots Baby Organic Cream and its supply curve shift rightward. If there is unfavourable
weather condition which cause decrease in its supply and its supply curve shift leftward.
TASK 2
3. Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century
Economics are refers to the scientific study of people which describe how they produce
goods and services and consume them. In 20th century, many economist developed various
theories for improving the study of producer and consumer behaviour (Ivanov, 2020).
Comparison between 21st century's and 20th century's emerging theories analyse various factors
in order to understand the changes which makes modern economics theory more effective. These
changes makes these theories developed more in years to years in effective manner.
Contemporary economic theory in 20th century and 21st century as well as their comparison are
described below:
20th century contemporary economics theory
In 20th century, various economics theory are developed by many economist in order to
make more effective. Adam smith is one of the economist of 20th century and it is considered as
father of modern economics. According to this theory, it describe an idea of an invisible hand in
which tendency to regulates free markets with the help of supply and demand, competition, and
self interest. It also create a concept which describe gross domestic product and different
compensate wages theory (Lampa and Abeles, 2020). This theory describes that it is important
for the employer to pay higher wages for the dangerous or undesirable jobs for attracting more
candidates for that position. In its free market philosophy it decrease the role of government
intervention and their taxation policy in the free market. According to its invisible hand theory, a
wealthy nation is one in which its citizen are more productive and perform their work in effective
manner in order to fulfil their need in appropriate manner.
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John Keynes is also an economists of 20th century and developed Keynesian economics
theory. This theory states that government of a country should increase the demand in order to
rise the growth in effective manner (Sedej, 2021). It believes that customer demand is the main
driving force in order to increase the growth of the economy. The theory supports the
expansionary fiscal policy. Its main tools are those amount that are used by the government in
order to develop infrastructure, education and unemployment benefits. Its one of the drawback is
it increased inflation in the economy.
21st century economic theory
Behavioural economic theory is focusing on irrational choices made by human being at
time when they are handling scarce resources. It is modern theories that is working as important
component that is emerged with other different types of theories and related with human
behaviour. It is an important components as it is including insight into psychological factors that
create impact over decision making process of people (Manu and Vasile, 2020). It is sufficient to
be used profit as well as utility maximisation which can be sued for purpose of prediction of
human behaviour in uncertainty scenario. Emotional response reflect by people who are living in
society can be follow in traditional model of economics related to supply and demand present.
Behavioural theories is one that is focusing on filling of gap by considering different types of
psychological factors and create influence over process of decision making of individual living
in society.
Nudge theories is another theory that can be also rise an a important theory of
behavioural economics. These are describing specific aspect of choice that can create impact
over behaviour of people for change without making change in incentives of economics in a
predictable manner. Nudge is a theories is not not compulsory instead it is described as
something can be notices and understandable by people (Pan and Yang, 2019). It is theory that
can be seen had finding out application of different types of policies of public through alteration
environment. Another things in this theory is that it is not focusing on being change in incentives
in economy available for target person. It is theory in which individual are making a specific
choice through alternation in environment that helps them to get desired results. There are two
different types of system which are processing information on act of people against their self
interest. It is basically includes fast, susceptible, automatic environment influence and slow,
reflective which are taking into account intention and goals.
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Comparison
Many factors are exist which makes 20th century economics theory different from 21st
century. 20th century economic theory states that society should acts in certain manner whereas
21st century economic theory describes the function of human psychology (SCARLATESCU,
2019). In 21st century economic theory, customers behaviour can affects the economy whereas in
20th century government decisions in order to develop an effective economy. In context of 21st
century, it is important to understand why and how people make decision in particular situation.
It is important for the economist to understand consumer behaviour and helps companies in order
to make proper decision and operate their functions in effective manner.
CONCLUSION
From the above mentioned report, it is concluded that contemporary business economics
helps companies in order to understand factors which affects on demand and supply of its
products and services. Law of demand help companies to make effective pricing strategy in order
to increase demand for their products in effective manner. Law of supply help companies in
order to make decision for the supply of their products in the market in order to earn maximum
profit from it. Emerging economics theories of 20th and 21st century developed various factors in
order to make economy better.
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