Contemporary Business Economics: Law of Demand and Supply, Theories in 20th and 21st Century

This report covers the Law of Demand and Supply, Changes in Demand and Supply Curve, and Contemporary Theories in 20th and 21st Century in Business Economics. It discusses the law of demand and supply, movement of demand and supply curve, and changes in demand and supply. It also analyzes different models or theories in 21st contemporary economics contrasting with 20th century comprising with business practices.

BM533 CONTEMPORARY
BUSINESS ECONOMICS

Table of Contents
INTRODUCTION...............................................................................................................3
MAIN BODY.......................................................................................................................3
Law of demand along with movement of demand curve and changes in demand curve
........................................................................................................................................3
Law of supply along with movement of supply curve and changes in supply curve.....6
Contemporary theories in 20th and 21st century...........................................................9
CONCLUSION.................................................................................................................11
REFERENCES..............................................................................................................................1

INTRODUCTION
Business economics is field which applied over economics which studies aspects
such as organizational, finance, market and environmental concerns featured by
corporations (Saulius, Valanciene and Bilan, 2020).
In this report it would be covering law of demand along with movement of
demand curve with aid of suitable diagram. In similar way it would be discussi9ng about
law of supply along with movement of same supply curve with aid of diagram.
Furthermore, it would analyse different models or theories in 21st contemporary
economics contrasting with 20th century comprising with business practices.
MAIN BODY
Law of demand and movement of demand curve, and changes in demand curve
Law of demand
The law of demand refers to the most important concept in micro economics. It
works with help of law of supply to show how market economics assign resources and
identify value of goods and services which is observed in day to day transactions. It also
depicts that quantity purchased alter inversely with cost factor. In order to same high
prices, decreased quantity demanded are the suitable terms. Demand is derived within
law of diminishing marginal utility and consumers utilize economic goods for satisfaction
to their most suitable requirements first. Changes in prices are reflected as per
movement along demand curve but do not by themselves in enhancement or reduce in
demand (Susiatik and Widiastuti, 2020). Similarly, in business activities' law of demand
works as higher price consumer will automatically demand low quality of good. So
consumer will favour in using good which satisfy their basic fundamental needs and
wants in most appropriate way.
Movement in demand curve appears when all factors impact to quantity
demanded and remain same but only price get changed in which demand curve shift
upwards or downwards with same curve. If there is change in quantity demanded for
specific commodity due to change in prices as other factors remains as usual, there
would be movement in quantity demanded with similar curve. The most important
aspect in microeconomic business is to look at other factors related to consumer's

income, choice, taste, preferences with prices of other variables remains same only
price of commodity changes.

Change in demand
In such circumstances price impact to quantity demanded and demand follows
similar curve before value changes, it is called motion demand curve. In this movement
it can be upwards or downward direction with suitable demand curve. The business
might face sudden demand curve for good it supplies and there are several factors
which affect demand. These affects can be observed through modification in demand
curve with the help of suitable diagram. The change in demand curve shows that
increase or decrease in magnitude of demand and supply through its equilibrium. Also,
there are some existing determinants other than price of commodity which impact to
quantity of demand such as consumer income, taste and preferences etc (Siddiqi and
Tangem, 2018). Due to these affect of those determinants, law of demand or supply of
product changes as well as demand of supply curve shifts. Also, fundamental
determinants for demand known as price for commodity within consideration, it can be
further concluded as change in price cause alter with commodity demanded curve. This
change is usually known as quantity demanded. Whereas, reduce price directs to
downward movement in demand curve in which there is addition in quantity demanded.
It impacts to equilibrium price and quantity, there are two possible ways which impact
business demand chain are as follows:
 Increase indicated shift to right in demand
 Decrease shows shift to left in demand

Increase in demand states if the income of consumer segment increase so the
price of goods and its supply will remain constant. The demand for those products will
also hike and demand will change whether the price or supply of product remains
constant, it is known as increase in demand. As such the supplies are short in business,
so the prices will tend to grow, in similar way due to hike in prices manufactures of
product also enhance supply to cover up extra demand in market. From this perspective
new equilibrium among demand and supply would be formed.
Decrease in demand
It is totally opposite from increase in demand as in this case income of consumer
gets decreased so price of good and its supply will remain as usual. While decrease in
income will negatively impact over purchasing power of consumers. Similarly, demand
of product will decrease due to such aspects and demand will change if the price or
supply of good remains constant, it is the process of decrease in demand. Also,
changes in quality demand results in movement within demand curve itself due to
change in prices. Consumers perspectives for various good is most crucial factor of
demand, existence in prices of other consumer good are substitutes which may modify
demand. The factors which affect demand are change in situations influencing
consumer preferences that can be also significant as such seasonal changes. Change
in income derive significance in increase or decrease quantity demanded at price
provided. For instance, taking an example of trampoline business in which demand will
increase in summer season, and it is not mandatory that product has seasoned for all
year long. Hence, high cost of good will get fall in demand of products and similarly in
opposite way low price of good will favour in hike in demand.
Law of supply and movement of supply curve, changes in supply curve
Law of supply
Law of supply is part of micro-economic law which indicates that all other factors are
equal as such value of good or service will enhance and quantity of good or service
which suppliers will often increase (Soelton and et.al., 2020). It is most key concept in
economics, and aligns with law of demand to evaluate how market economies assign
resources and ascertain price of good and services. Law of supply shows that as price
of item gets upwards in which suppliers will adapt to maximize chance of increasing

profit by number of item being sold for sale. Similarly, business look further to gain more
revenue and try to expect to achieve the favourable concerns and make production for
the same. Supply in market is also represented as upward slanting supply curve which
reflects how quantity supplied would response to different price in period of time.
Supply curve slopes upward due to they can select how much of good to produce
and later brought to market. In particular point of time, supply which seller brought into
marketplace is fixed as well as sellers simply look for decisions to either deal or recoup
stock from sale. The sales are those in which consumer set price and sellers may
change what market will deliver. If consumer demand uplifts with particular time as price
will enhance and suppliers get chance to formulate new resources to production, or they
can enter in marketplace which reflect to increased quantity supplied. Demand in the
end set the price in competing market and suppliers responds to price that thy are

expected to receive sets quantity supplied. For instance, enterprise will make production
of more video game method and if the pricing of them will uplift.
The law of Supply, movement with similar supply curve likely with demand curve,
supply curve states that supply relations are constant. Although movement in supply
curve forms to occur when price of specific good gets changed and quantity supplied
changes with primary supply relations (Kaur and Naderajan, 2019). On the supply curve
the changes are drawn on the basis of both quantity and price with one point to another
in curve. Thus, it can be stated that movement with supply curve reflects fluctuation in
quantity supplied of commodity with alteration in price range while assuming other
element as usual. There are two major components in this which states briefly about
movements in supply curve:
extension of supply
In this stage when amount supplied of commodities enhance with rise in prices, it
is named as extension of supply and other belongings remains to be similar.
For example if the cost of ice cream is amount of 10 and quantity provided is 5 unit so
when the cost increase to 20 supply will also extend to same as 10 units.
Contraction of supply
In this stage when the quantity is supplied to commodity reduce with fall in price it
is called as extension of supply and other factors remain equal. For example, price of
ice cream is amounted for 20 and quantity supplied for the same 10 units, so when price
rises by 10 and supply would extend by 5 units.
Shift in supply curve
In this factor of law of demand when a supply of commodity changes for the
business in the industry to some aspects rather than their value related to good,
technology and production costs. There is a shift which can be seen in the curve rather
than the movement on its own axis. Shifts in the supply curve are classified as follows:
 upward shift
 downward shift
Upward shift shows that it is crucial for the business to change the the several
determinants of rthe supply rather than the price and other aspects in the supply curve.
It also consists of two factors such as:

 same price more supply
 less price same supply
Downward shift in curve enhances because of the aspects of the supply leaving
its price considers an upwards shift in the supply curve. Enhancement in the pricing
comprises of factors:
 Price is same but supply is less more price but supply is same
Change in supply curve
Change in the supply is is represented with a shift in the supply curve cause an
imbalance in market which is corrected by change in prices and demand. While
increase in changing supply, shift the curve to right with decrease supply curve towards
left. An increase or decrease are the factors related to quantity supplied and complied
with high and low supply price (Domanovic, 2020). There are some determinants in
supply curve which states that when other aspect changes it also impacts over change
in price. There are some basic consequences for economist which states that some
primary changes causes changing in supply which makes essential shifting for supply
curve. There are following determinants of supply curve which has been described
below:
 Number of sellers
 Cost of raw material
 Expectations of future prices
 Technology
 Government regulations
For example, if technology reduces cost of gaming console production for
manufactures as per law of supply so the output of similar console will tend to increase.
While with majority of output in places, price of consoles would be likely to fall in order
to be forming up more demand of product in marketplace. Technological advancements
are highly concerned in regarding to change in supply.
Contemporary theories in 20th and 21st century
The concept of economics explains different aspects of the societal produce
products and services as well as understanding it properly. The theory of economics

has been able to enhance the structure of global finance in the industry. various crucial
occurrence regularly historical aspects, it an important term in day to day living. Most of
the assumptions states that economics have changed dramatically in such historical
aspects. In elaborating to theories in twentieth century is a narrative of discontinuity as
such game theory of contemporary economics is key aspect. The game theory
revolution theory shows different crucial situations in establishing competitive
relationships with players terms game theory is science of strategy or least optimal
decision-making of independent. The application of game theory into the natural
scenarios with a particular circumstances where pricing and product releases are to
may be arranged for further outcomes has been predicted. While in the business
context this theory favours as such competing companies have options to select basic
price structure agreed upon by other companies or to introduce decrease price
schedule (Saputra and Anggiriawan, 2021). For instance, the classical example of this
theory in business world rises with identification of economic environment defined by
oligopoly. On the other hand competitive companies have options to accept the basic
pricing strategy, being in common interest to collaborate with competitors with logical
though process leads to default. The game theory has been able to enhance the overall
success of the business in, for example medicinal organizations systematically develop
perceptions. The decisions are relevant to whether marketing product instantly and
gaining competitive edge over other competitive firms. While contrasting to the
measures of game theory in contemporary economics.
Firstly it assumes that individual firm is capable with strategies of different people
in response to own approaches and develop[s a pay off matrix for solving problems.
There are different approaches which is being surveyed by most of rivals against it
leads to endless chain as thought of highly impracticable. It also assumes that duopolist
are prudent men, whereas each competitor shift on presumptions in which opponent
would always form move and adapts countermove. Thus, game theory fails to provide
with suitable solution for duopoly issue as well as contribution towards theory of
oligopoly is very disappointing. On the other hand game theory aids in providing
solutions to some complex economic issues as such in mathematical technique as well,
and being in development stage.

While discussing about economic theory from 21st century Keynes theory states
the inadequate of overall demand favours to prolonged period of higher unemployment.
The economy output is sum of products and services in four major components such as
investment, governmental purchase, consumption and net export. The main aspect
which is covered by Keynes theory is realized with not having automatic mechanism as
such main stream view of self-regulating economy is observed. According to Keynesian
economics highlights the new terms of looking further spending, inflation and outputs.
The lower level of inflation as well as wages might induce staff to build capital
investment and employ more individual. For business practices, Keynes theory states
that poor business conditions cause for companies to decrease capital investment
rather than taking benefit of low prices to spend in new plants or equipments. This will
also impact to the overall business expenditures and employment. For instance, this
theory depicts inadequacy spending over labour-intensive infrastructure task for
stimulating employment as well as stabilize pay-off at time of economic downswings. So
it would uplift taxations to lower down negative impact on economy and preventing
economic process in the case of abounding in demand side growth.
There are some limitations such as borrowing leads to high interest rate as well
as financial crowding out. Resource crowding out is another measure as if government
borrows to finance high investment, the borrowing is based on private sector and similar
they will have few resources. Inflation is another measure which shows problem to
financial expansion which arises in order to recover the economy significantly in the
industry taking away and causing harm. Lag in time are consumed with longer time to
change with aggregate demand by time enhances causes delay and direct to increases
in the prices in the market. There is difficulties which arises in gaps of output, as such
assumptions of Keynesian economic because it is possible to cover how much demand
it would be required to deal with output gap. For instance, it can be said as with the
unexpectedness fall in the productivity in might be in very low extent despite low rate of
economic growth. So in this scenario suitable is not the reason for the increase in the
overall productivity of the businesses in the industry.

CONCLUSION
From the above presentation it has been summarized about law of demand with
its movement and changes in the demand curve with the help of suitable diagrams. In
similar way it has discussed law of supply with its movement of same supply curve and
shift in supply curve reflecting with appropriate diagram. At the end it is been found out
that in 21st contemporary economics and contrasting with 20th century comprising with
business practices ate having some differences.

REFERENCES
Books and journals
Domanovic, V., 2020. CONTEMPORARY ISSUES IN ECONOMICS, BUSINESS AND
MANAGEMENT-EBM 2020. Ekonomski Horizonti. 22(1). pp.79-80.
Kaur, P. and Naderajan, R., 2019. Kahoot in the English language classroom. South
East Asia Journal of Contemporary Business, Economics and Law. 20(6).
pp.49-54.
Saputra, K.A.K. and Anggiriawan, P.B., 2021. Accounting, Auditing And Corruption In
Kautilya’s Arthasastra Perspective And Psychogenetic Hindu: A Theoritical
Review. South East Asia Journal of Contemporary Business, Economics and
Law. 24(2). pp.67-72.
Saulius, T., Valanciene, D. and Bilan, S., 2020. Critical thinking in contemporary
business education: Philosophical perspectives. Transformations in Business &
Economics. 19(2). pp.21-37.
Siddiqi, T. and Tangem, S., 2018. Impact Of Work Environment, Compensation, And
Motivation On The Performance Of Employees In The Insurance Companies Of
Bangladesh. South East Asia Journal of Contemporary Business, Economics
and Law. 15(5). pp.153-162.
Soelton, M. and et.al., 2020. Factors affecting turnover intention among waiters in
franchise restaurants. South East Asia Journal of Contemporary Business,
Economics and Law. 21(5). pp.2289-1560.
Susiatik, T. and Widiastuti, E.H., 2020. Empowering women in developing autonomous
enterprises to enhance family welfare in Bendan Duwur sub-district
Gajahmungkur district. South East Asia Journal of Contemporary
Business. Economics and Law. 21(5). pp.195-200.
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