Contemporary Business Economics

This report explains the law of demand, supply, and change in demand and supply curves with the help of appropriate diagrams. It also compares and contrasts emerging theories and models in 21st century contemporary economics with those of the 20th century and connects them with certain business practices. The report highlights the importance of social and environmental responsibility, as well as the psychological factors that influence consumer behavior in modern business practices.

Contemporary Business
Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................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............................................1
1.2 Explain the law of supply, movement along with the supply curve and also
explain change in supply curve with suitable diagram...............................................................4
TASK 2............................................................................................................................................7
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........................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES

INTRODUCTION
According to Adam smith who is father of economics, economics is the study of
wealth only and it is study of only material goods(tangible), intangible goods like air,
sunshine, and services does not create wealth. It studies change in wealth which is
known as economic development. It is science of scarcity, which means we have
unlimited wants but limited resources(Baker, Kumar and Pandey 2021). Demand ans
supply are two main and important aspects of economics. In this respective report the
company chosen is Tesco, which is multinational grocery retailed shop which avails
the customer every grocery product they need, it is headquartered in Welwyn garden
city, England and it is the third largest retailer in worldwide base, also in term of
revenue it is the ninth biggest retailer, founder of tesco was jack cohen. Law of
demand and supply show different relationships between price and quantity demanded
or supplied.

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.
Demand refers to the need of goods and tendency to buy the products and services at
given prices(Shahbaz and et.al., 2021). Demand can also be explained as good
demanded for a particular product or collective demand for the commodity.
Law of demand:
As per this law, there is inverse relationship between price and demand, it
defines that when prices for the commodity will increase then the demand for that
particular product will also increase(Vatsa, 2021). These goods are inversely related
to one other with the prices and the demand of the given goods in the market which
also shows the better consideration of the market. In context to tesco, we have
selected one particular good from tesco which is berries so, when the given price of
the product increases then the demand for other retailers tends to fall down as the
consumer will buy affordable goods.
As per the curve, the demand curve is sloping downward due to inverse relationship
between the prices and the quantity demand of the given goods in the market. When
the prices rise from p3 to p2 then the demand falls from q2 to q1 due to the higher
prices of the products in the market.

Factors affecting demand of the specific good are as follows:
 Price of the commodity: When the prices for products change, as when it
decrease the demand for the good will increase. On the other side, if price for
products will increase then the demand for the good will decrease. So when
price of berries will rise, demand for them will fall down as price is the
important aspect in view of consumer.
 Price of substitute goods: There are some products which can be replaced
easily and berry is one of them other retailers are also selling berries(Li and et.
al., 2021). And when other rivals will provide the same quality of berry with
low price then, the consumer will be inclined to buy it from some other
retailer. As consumers are always prioritizing the most affordable goods
provided to them.
 Price of compliments goods: These are the combination of goods which are
available to customers in the market, and in tesco market there is no particular
compliment of berries. If prices of the other compliment good increase then
the demand for actual product which is berry will tend to fall down and if
prices for compliment goods decrease then the demand for berry will increase.
 Taste and preferences of the consumer: It is most important that consumer
reference is always considered because the main goal of seller is not satisfy
the customer, if customer is liking the product and the quality provided by
retailer then he will be inclined to buy that particular good. And the
manufacturing must always keep in mind that what is the taste of consumer
and what are the preferences of the customers.
 Income of the consumer: Income is the most important aspect in economics,
the consumer will always buy the product when he in a situation where he
has good income and if his income is not up to the mark then he will be able
to buy the product and services. When income of consumer is high then the
demand for the goods will be high, and when income of consumer is low
then the demand for the goods will fall down(Salehi-Esfahani, Ridderstaat
and Ozturk, 2021).
 Change in future expectations: It is somehow related to the supply of the
given products in the coming time as it is expected that the prices of the goods
may rise in future then the demand for such commodities tends to rise in
present time.

Change in demand curve:
It is known as the changes that occur due to the factors which affects law of demand,
which are price for the commodity, income of consumer, taste and preference of user
and the changes that take place due to these factors
Change in the demand curve make the shift in the demand curve to the rightward or
can be to the leftward. In case of increasing demand, the demand curve will shift to
the right whereas, decrease in the demand of the given goods tends to the have the
shift in the left of the curve. In this given curve, the demand will shift from d0 to d1 in
case of fall in the demand of some goods and increase in the demand curve make shift
to the right from d0 to d2(Wilkins and et.al., 2021). The complete change in the
demand curve can be effected by various prospects and includes taste and preferences
of buyer, price of the commodity, income of the consumer and so on.
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 availability of products by the vendor to the consumer and it is
also defined as the amount of services provided to customers and the particular
amount of goods which are being supplied to customers in the market place(Singh and
et.al.,2021)

.
Law of supply
It is the positive relationship of price and quantity, it says that with keeping all
the factors constant there will be increase in the supply. For example when prices for
berries will increase but the vendor will also modify the quality of berries and when
the quality is getting better, some people will be attracted due to good quality and
compromise with the price. When prices will, fall down the supply will be also be
affected and will, fall down and in this law with holding all factors same, there will be
change in supply due to price(Bhakoo and Meshram, K., 2021).
In this curve, it is shown that supply curve is sloping upward due to the positive
relationship between the prices of goods and services in the market and the certain
offers, when the prices of goods decreases from p2 to p3 then the demand for
particular commodity also decreases from q2 to q1. There are different aspects which
is influencing the business and also effecting the overall functionality of the company
in the target marketplace.
Factors affecting supply of the specific good are as follows:
 Costs of production: These are some of the factors of production like raw
material and different materials required in business, which directly affect the
supply and shows the positive relationship between cost of production and
supply. When cost of production will increase, the supply will be decreased
and on other side when cost of production in Tesco will decrease, the supply
will be increased.

 Government Subsidies: There are some products which have direct impact
on price of the good due to government subsidiary. These are the some
benefits which is offered by the company and having big impact over the
working of the business. Rise in the prices of subsidiaries tends to rise the
overall demand of the given good in the market.
 Technology: It refers to enhancing and developing the technology, and in
market people are always inclined towards the latest product, good quality and
others. Tesco can easily cut their prices by innovative ideas, and developing
the technology tends to have betterment in supply of goods and services. So
when the seller will provide latest goods to consumer then the supply will also
be increased as people will be more attracted towards that specific good.
 Objectives of firms: There are different type of companies which are forces
of profits and some are giving importance on welfare of the society so if the
company is busy in making higher profits then they supply more quantity of
goods in the large market and, also focused in the betterment of the
tesco(Duong and et. al., 2021).
 Weather: It is the aspects which emphasis on the supply of goods and there is
major impact of given goods in the market. In reference to Agriculture
industry, there is the significant impact of the weather as the tesco is operating
their shops in food relating goods which can effects the overall woring of
grocery shops.
 More firms: It ias related with the rivals that tesco is having in the market, as
it is evident that if more rivalry firms will come then the competition will
increase and by more rivals, people will have other options to buy goods from
different stores. Due to this the supply of tesco can fall down, and leads to
decrease in their revenue(Atanov and et. al., 2021).
.
Change in Supply Curve:
A change in the supply shows the shift in the supply curve as it can be shift to
the right or left because of change in the different factors. When the supply of given
goods such as berry increases or decrease then the demand for such goods also falls
down in the large market(Gernaat and et. al., 2021). Increase in the supply shift the
curve from s0 to s1 and decreases in the supply makes fall the supply curve from s0
to s2.

As per the curve, it is shows that when the prices of the goods tends to fall down, then
the supply of the some goods also fall down. When the supply curve shift to the right
which is because of increases in the prices of the goods implied in rise in the overall
supply ad the curve will shift to s0 to s1 and vice-versa.
Task 2
Compare & contrast emerging theories & models in 21st century contemporary
economics with those of the 20th century and connect then with certain business
practices.
There are some theories given by famous economist and they are very helpful to know
the economics in a close view, also having the combination of the certain factors and
these are explained as follows:
 Neo-classical theory - it is the theory which explained the advanced version of
classical theories wherein, the behavioral sciences get involved into the
management. According to this theory, the company is a social system, and its
performance does get affected by the human activities.it emphasis on
physiological and mechanical variables and considered these as a primary goal in

checking the efficiency of the venture. Thus the researchers tried to know the
reason for human behaviour at work place. This led to the creation of this theory
which mainly focus on humans in organization(Attar, 2021)
The Neo-Classical theory posits that an organization is the combination of both the
formal and informal forms of organization, which is ignored by the classical
organizational theory. The informal structure of the organization formed due to the
social interactions between the workers affects and gets affected by the formal
structure of the organization. Usually, the conflicts between the organizational and
individual interest exist, thus the need to integrate these arises.
 Keynesian economics theory - In this theory, Keynes argued that investment,
which responds to changes in the interest rate and to expectations about the
future, is the dynamic factor determining the level of economic activity. He also
maintained that deliberate government action could improve full
employment(Sasaki, 2021). Keynesian economists claim that the government can
directly influence the demand for goods and services by replacing tax policies
and public expenditures.
Starting in the 1970s, Keynesian economics was influenced by monetarism, a
macroeconomic school that advocated controlled increases in the money supply
as a means of mitigating recessions. Following the global financial crisis of 2007–
08 and the ensuing Great Recession, interest in ongoing theoretical refinements
of Keynesian. This theory really helped aot of business firms to maintain their
revenues and profits,. The last is aggregate demand and also shows that weather the
demand is anticipated or unanticipated. There is greatest short run which also effects
the employment and the prices.
 Marx's Social Economic system- Marxism is the social, political and economic
theory which is propounded by Karl Marx's that focuses on struggle between
capitalists and the working class. He truly believed that the conflicts would
ultimately lead to the revolution in which the working class would overthrow the
capitalist class and seize control the economy. Underlying everything as the real
basis of society is the economic structure. This structure includes (a) the “material
forces of production,” that is, the labour and means of production, and (b) the
overall “relations of production,” or the social and political arrangements that
regulate production and distribution. Although Marx stated that there is a
correspondence between the “material forces” of production and the necessary

“relations” of production, he never made himself clear on the nature of the
correspondence, a fact that was to be the source of differing interpretations
among his later followers(Zappia, 2021).
Above the economic structure rises the superstructure, consisting of legal and
political “forms of social state of mind” that correspond to the economic structure.
Marx says nothing about the nature of this agreement between ideological forms and
economic structure, except that through the ideological forms individuals become
conscious of the conflict within the economic structure between the material forces of
production and the existing relations of production expressed in the legal property
relations. In other words, “The sum total of the forces of production accessible to men
determines the condition of society” and is at the base of society. “The social structure
and the state issue continually from the life processes of definite individuals as they
are in reality, that is acting and materially producing.” The political relations that
individuals establish among themselves are dependent on material production, as are
the legal relations. This foundation of the social on the economic is not an incidental
point: it colors Marx’s whole analysis.
In the modern theory, it is the major concern with the aggregate demand that is
affected by some economic decisions in the public and private sector companies.
Whereas the Neoclassical theory is majorly based in the three aspects that are capital,
labour ans technology and the final consideration is to have the theory and the other
aspects to get advancement and the economic growth.
Conclusion
From the respective study, it can be concluded that the demand and
supply are the main sources of economics and they play very important
role in firm, and the factors affecting law of demand like price, taste and
preference and so on and factors affecting law of supply like technology,
rivals and others. Lastly theories ere discussed and the theories explained
how theory can help in going well in business and how it is very
important to apply some theory in company.

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