Contemporary Business Economics: Explaining Law of Demand and Supply, Comparing and Contrasting Emerging Theories and Models in 21st and 20th Century

This report explains the law of demand and supply, compares and contrasts emerging theories and models in 21st and 20th century economics. It emphasizes the importance of having appropriate knowledge regarding the factors affecting demand and supply for taking strategic decisions.

Contemporary business
economics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Explaining law of demand movement along the same & change in demand curve....................3
Explaining law of supply movement along the same & change in supply curve........................6
TASK 2............................................................................................................................................8
Comparing and contrasting the emerging theories and models in 21st century and 20th century.8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Contemporary business economics is related with identifying the issues which has
impact on the organizational practices. In the current era, having significant information
regarding the contemporary issues is crucial as it helps in formulating the strategic decision so
that accomplishing objective of gaining success can become possible. The current study is based
on British Associated Foods which is one of the manufacturing organization operating that
sugar yeast, etc. Recent report will emphasis on explaining the law of demand and supply by
involving movement along the same curve and change in curve. This will include comparing &
contrasting of theories of emerging in contemporary economics and 20th century by relating to
modern business practices.
TASK 1
Explaining law of demand movement along the same & change in demand curve
The law of demand is one of the fundamental theory of economics which is taken into the
consideration of understanding the relationship between the price is quantity demanded. It states
that there is indirect relationship is found between the two variables such as price and quantity
demanded (Allen, 2022). Higher the price lower would be the quantity demanded so it shows
the inverse relationship between these two mentioned variables. Business has main objective of
operating in the particular industry is the higher profitability & revenue so that greater stability
can be derived. There are various objectives of the customers that are basically accomplished by
making the significant purchasing decision. They focus on purchasing the higher quantity on
lower price & vice versa. Business practices in the modern era require higher level of focus on
customers as greater competitiveness through this can be derived. With help of this particular
law company can get the ability to encourage consumer to buy more.
The movement along the demand curve is seen when consumer reacts indirectly to the
direction of change in the price of commodity. In this case price inclines and quantity demanded
falls which affect the revenue & profitability of organization. there is assumption that other
factors remain constant other than price. This assumption is basically presented as ceteris
paribus which means that remaining constant for the other factors than price of commodity. The
change in commodity price outcome s in alternation in the goods demanded by consumers.

Price Quantity demanded in units
50 40
60 30
From the above table and the presented diagram, it can be mentioned that there when the
price is increasing the quantity demanded by the customers increasing. On the basis of prepared
diagram, it can be evaluated that price and quantity are plotted on Y and X axis respectively.
This is showing that change occurred from point A to B due to increase in the price. This results
in downward solving of demand curve is indicating that demand has declined due to rise in price
(Reeves, 2021). With help of the table it can be identified that customers’ response negatively to
the increase in the price which is required to focus by the company for gaining effective
performance.
There are various factors that results in change in the quantity demanded. This involves
income of consumer, taste & preferences, availability of substitute, price of complementary
goods, advertising, weather, expectation of fluctuation of price in near future, etc (Factors
affecting demand, 2022). Organization require to focus on having the significant understanding
about the prevailing situation which is leading to the change in demand so that crucial cause for
60
50
Price
Quantity30 40
A
B
D

taking corrective action can be taken. This results in shift of the demand curve as the factors as
mentioned other than price of goods changes. The shit can be occur to the left and right side of
the demand curve which provides assistance om gaining significant information for formulating
crucial business practice so that higher stability in adopting changes to coordinate with
prevailing market can become possible.
Price Quantity demanded in units
50 30
50 40
In the above illustrated diagram of shift in demand curve, quantity demanded & price are
presented on X &Y axis respectively. From the above pictorial presentation, it can be interpreted
that price in the current case is remaining the same but the demanded quantity has inclined from
30 to 40 units. D indicates original curve and D2 shows shifted curve that is occurring due to
rise in demand at the same price level. It can be identified that rise in income, consume taste &
preferences, non-availability of substitute, etc. are the factors that are leading to shift in the
demand curve to the right side. With respect to this, it can be articulated that there are different
factors which leads to formulate the change in the demand change by shifting to the right side
this is highly taken into the practice for making strategic practice so that accomplishing objective
of higher profitability can be attained.
Explaining law of supply movement along the same & change in supply curve
It is the fundamental principle of economic theory which states that keeping the other
factors constant an increase in price results in an incline in quantity supplied (Meyer, 2020). It
50
Price
Quantity30 40
D
D2

articulates that there is direct relationship is found in the variables such as price and quantity
supplied. This shows that companies react directly in quantity supplied to change in price. There
are various laws which are available to the firm but paying attention on the law of supply
becomes crucial for gaining competitiveness through understanding different components tan
price that can affect their ability to meet supply objective.
Movement along the same supply curve occurs when the supplier tends to react directly
to the change in the price. Greater quantity will be supplied to the rise in the price which allows
firm to accomplish the objective of higher profitability and sustainability. In this movement the
upward slop is found which shows direct relationship between the mentioned variable.
Price Quantity supplied in units
50 30
60 40
From the above shown diagram it can be mentioned that there is direct form of the relationship
between the supplying quantity and price. On the X and Y axis quantity and price are plotted.
There is upward sloping supply curve is shown which is reflected by S that a ids in dinetifying
that there is direct relationship between the price & quantity supplied. There are various h
objective which are basically accomplished by organization through ensuring that higher revenue
via gaining greater profitability can become possible. This aids in understanding that firm sells
greater goods as price increases
Shift in the supply curve is seen due to various factors which affects the supplying
decision of organization. In this all the other factors other than price changes which leads to
extension or contraction of supplies of organization (Factors Affecting Supply of a Product,
60
50
Price
Quantity30 40
S

2022). this factors are decrease in cost of the goods manufactured, greater availability of firm.
Investment in capacity, weather, productivity of workers , technological improvement, lower
taxes, objective of firm, etc. firm operate in sector in such effectual pattern so that
eliminating the irrelevant aspects via having appropriate evaluation in turn strategic position can
be derived. for gaining the success there are various objectives which are basically formulate by
the firm for attaining higher level of effectiveness in turn maximum revenue generation for
inclining capacity can be done. This factors either leads to the shift of curve in right or left that
tend identify that quantity offered has alerted due to the change in other factors than price
Price Quantity supplied in units
50 60
50 70
On the basis of the plotted diagram regarding the change in the demand curve which is
presenting shift from left to right. In the current diagram there is X & Y axis in which quantity
supplied and price are plotted. There is upward sloping curve which is resulted due to the
increase in the quantity supplied at constant price. S is showing original curve and S2 is
depicting that shifted curve. The main reason behind the shift is curve is due to change in the
factors such as decrease in production cost, inclined capacity of manufacturing, positive weather,
technology improvements, etc. On the basis of this information it can be stated that here are
various factors in the economy that provides the influence on the decision making procedure of
50
Price
Quantity30 40
S S2

organization regarding its supplying goods. The particular firm with help of the law of supply
can get the significant information regarding the prevailing circumstances in turn taking
strategic decision to obtain the effective ability to achieve success.
This can be said that having appropriate knowledge regarding the factors affecting
demand & supply provides proper ability to take strategic decision. Fo gaining the success in the
current era, organization need to pay attention n having the significant details regarding these
mentioned factors and relative changes h so that appropriates stability in economy can be
attained.
TASK 2
Comparing and contrasting the emerging theories and models in 21st century and 20th century
For the effective working of the economy it is very essential that the proper here is an
models are being applied within the working. This is very necessary because in case economic
decisions are taken without considering these are specs then the decisions will not be worth. And
it is very necessary and crucial for the Government and other related members that they
effectively evaluate the different theories and then take the decisions for the betterment of the
economy. In the earlier time that is the 20th century different economic theories were being
applied within the practice (Sharpley, 2020). This is particularly because of the reasons that in
the earlier times the use of different theories was lesson and more Emphasis was led over the
effective analysis of different factors and accordingly takes the decisions. But with the 21st
century the major reference is being given to the different economic theories and models. This is
particularly because of the reason that the use of different theories and models help the decision
takers to take the decisions and better and effective manner.
With respect to the 20th century there is the use of new classical theory was applicable
within the economy and its working. This neo- classical economic theory is a theory which
majorly focuses on the supply and demand as the driving force behind all the different economic
activities these different economic activities involves pricing production consumption of goods
and services and many other different aspect (Howard, 2018). This theory majorly emphasizes
on the fact that in case demand and supplies will not meet then the production will not be able to
done in intended manner. All the decisions are being taken with the help of the equilibrium of
demand and supply. In case the equilibrium will not be set then the decisions relating to pricing

and selling will not be undertaken. Hence this theory clearly emphasized only fact that use of
demand and supply forces is very essential for the decisions relating to the economy to be taken.
Furthermore, 21st century the economics theories and concepts have been developed
much better and the different theories have been evolved. Within the modern error that is 21st
century the compliance with the Keynesian economic theory was applicable. This is a Theory
which relates to the managing of total spending within the economy as it is being the effect of the
output inflation employment and other economic aspects being present within the economy. This
is particularly because of the reason that the economy operates with different factors and in case
all these factors will not be under taken then it will be affecting the efficiency of the whole
economy. This theory was being proposed by the British economist John Maynard Keynes. This
theory majorly focuses the demand side and the changes within the economy for a short period of
time. This theory was first being used in order to analyse the market based changes and the study
of the whole national economy and aggregate variables.
The propagator proposed that increasing government expenditure and lowering down the
tax first stimulating the demand and to increase the demand within the whole economy even in
the error of depression. This theory majorly focuses on using active government policy in order
to manage the demand and try to prevent the economic recession (Narula and et.al., 2019). This
is particularly because of the reasons that in case the demand will be managed in the recession
period then this will improve the economic condition of the country. This theory is beneficial
because even in case of depression or depression within the economy in case major focus will be
emphasized on developing the demand then this will increase the economic profitability and will
be beneficial for the country to grow and development and case of recession.
Furthermore it can be stated that the use of 21st century economic theory is very essential
in order to improve the working efficiency of the whole country. This is particularly because of
the reason that in case the latest and modern economic theory will be applied within practice then
it will result in better outcomes and development and growth of the economic (Natter, 2018).
Thus it is very beneficial for the business practices that they comply with the modern
economic theory such that the property of the business will increase. Also with the analysis of
the economic theories it can be stated that the new classical theory is older and need to be
updated. In case only focus will be led on demand and supply then other economic aspects like
inflation, deflation, recession, cost of production, labour and other different elements will be

grown. Hence it is very necessary for the business that before taking any this reason they must
compliers with the modern economic theories and not the new classical theories.
CONCLUSION
In the end from the above report it is concluded that complying with Economics is very
essential for the effective working of the business. The first part of the report highlighted that
demand and supply need to be analysed by the business and in case it is not being done then
business will not be profitably working. Also there are different factors which affect the demand
and supply of the business and this need to be considered by the business before taking any
decision. Moreover the another part of the report highlighted that the compliance with the 21st
century economic theory is very essential in order to improve the working efficiency and the
business practices of the modern business. In case business will be complying with the older
theories and the business will not be profitability and will not be able to take proper decisions.

REFERENCES
Books and journals
Allen, R., 2022. Injectivity and the law of demand. Economics Letters. p.110496.
Howard, P.G., 2018. Twenty-first century learning as a radical re-thinking of education in the
service of life. Education Sciences. 8(4). p.189.
Meyer, T., 2020. Trade law and supply chain regulation in a post-COVID-19 world. American
Journal of International Law. 114(4). pp.637-646.
Narula, R., and et.al., 2019. Applying and advancing internalization theory: The multinational
enterprise in the twenty-first century. Journal of International Business Studies. 50(8).
pp.1231-1252.
Natter, K., 2018. Rethinking immigration policy theory beyond ‘Western liberal
democracies’. Comparative migration studies. 6(1). pp.1-21.
Reeves, T., 2021. The Inviolable Law of Demand. Available at SSRN 3930186.
Sharpley, R., 2020. Tourism, sustainable development and the theoretical divide: 20 years
on. Journal of sustainable tourism. 28(11). pp.1932-1946.
Online
Factors Affecting Supply of a Product. 2022. [Online]. Available through
https://www.analyticssteps.com/blogs/10-factors-affecting-supply-product>
Factors affecting demand. 2022. [Online]. Available through:
<https://www.economicshelp.org/microessays/equilibrium/demand/ >
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