Contemporary Business Economics: Law of Demand and Supply with Reference to M&S

This report discusses the law of demand and supply with reference to Mark and Spenser Company. It covers the movement along with same demand & supply curve and changes in demand and supply curve of products of M&S company. The report also compares the emerging economic theory of 20th and 21st century such as Freidman and Keynesian economic growth theory and model.

CONTEMPORARY
BUSINESS ECONOMICS

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK A...........................................................................................................................................3
1.1 Explanation of law of demand, movement along the same demand curve and changes in
demand curve with reference to M&S.........................................................................................3
1.2 Explanation of Law of supply, movement along the supply curve and shift in supply curve
within the reference of M&S company.......................................................................................7
TASK 2..........................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1
Table of Figures
Figure 1: Graphical presentation of movement along the demand curve........................................4
Figure 2: Graphical presentation of shift in demand curve.............................................................5
Figure 3: Graphical presentation of movement along the supply curve..........................................7
Figure 4: Graphical presentation of shift in supply curve...............................................................9

INTRODUCTION
Business Economic means the process of studying and analysing the financial,
organizational, market and environment related issues faces by the organization via apply
various economic theories. The report will discuss the law of demand and law of supply with
reference to Mark and Spenser Company. M&S is a British multinational retailer having
headquarter in London, UK. The company basically offer cloths, home products and food
products to its women and men local as well as international customers. Lastly, the report will
also cover the movement along with same demand & supply curve and changes in demand and
supply curve of products of M&S company.
TASK A
1.1 Explanation of law of demand, movement along the same demand curve and changes in
demand curve with reference to M&S
Law of Demand
The law of demand state that when the prices of the products increases, then in such case
the quantity demanded will decrease or vice-versa. It is because of the inverse relationship
between the price and quantity demand (Cerreia-Vioglio and et.al., 2021). For example, Dark
chocolate is a food product which is offered by M&S is also provided by the other competitors
such as Tesco, Walmart etc. Thus, if Tesco will change the price of its dark chocolate then the
demand of dark chocolate will also be change inversely because of the law of demand concept.
Movement Along the demand Curve
This concept depicts the changes in the both price and demand factor remaining other
factors being constant. It means changes in the price will leads to changes in the quantity
demanded. But, the other factors on the same side will not change with the change in price and
demand factor. The two types of movement along the demand curve is contraction and extension.
Table 1: Relationship between Price and quantity demand of dark chocolate product of M&S
Price per Kg
(£)
Demand in kg per day

5 10
10 20
15 30
Figure 1: Graphical presentation of movement along the demand curve
Contraction along the demand curve:
This is a type of movement along demand curve which is also known as the upward
movement along demand curve. In this, the quantity demand of the products decreases or fall
because of the increase in the price of the products (Cerreia-Vioglio and et.al., 2021). For
example, on the basis of above diagram, if the price of the dark chocolate of M&S company will
increase from £10 to £15 per kg. Then, in this case the quantity demand of the dark chocolate
will decrease from quantity 20 kg to 10 kg per day as per contraction along the demand curve
concept.
Expansion along the demand curve:

This is another type of movement along the demand curve which is also known as
downward movement. In the case of expansion, the quantity demand of the products gets
increase because of the decrease in the price of the products, assuming other factors constant.
For example, on the basis of above data and diagram it is identified that as the price of the dark
chocolate product of M&S has decreases from £10 to £5, the quantity demand of the dark
chocolate in a day has increased from 20 kg to 30 kg. It is because of the expansion along the
demand curve concept of micro economics.
Shift in Demand Curve
This concept of micro-economics states the changes in the other factors and quantity
demanded, assuming price factor remain constant. The other factors which affects the demand of
the products except price is consumer income, taste & preferences, future expectations, the price
of related goods and number of potential buyers (Kiseleva, and et.al., 2021). This state the direct
relationship between the other factors and demand. The two types of shift in demand curve
includes rightward shift and leftward shift.
Table 2: Relationship between the income of consumer and demand of dark chocolate of M&S
Income of
consumers (£)
Quantity demand in kg per day
100 20
200 40
300 60
Figure 2: Graphical presentation of shift in demand curve

Rightward shift in demand curve:
This is a type of shift in demand curve which state that the quantity of the products will get
increases with the increase in the income of the consumers (Grübler, Ghodsi and Stehrer, 2021).
For example, on the basis of above data and graph, it is identified that when the consumer
income has increased from £200 to £300, the demand of the dark chocolate of M&S company
has also increased from 40 kg to 60 kg per day. This is because dark chocolate is a normal good
which is consumed by every people of UK.
Leftward shift in demand curve:
This concept means that when the other factor such as income of the consumer decreases
assuming price factor constant, then in such case the quantity demand of the normal goods will
also decrease. For example, the above data and graph indicate that as the consumer income has
decreased from £200 to £100 the demand of the dark chocolate has also decreased from 40 kg to
20 kg per day because of shift in demand curve concept of economics.
Rightward
shift in
demand
curve
Leftward
shift in
demand curve

1.2 Explanation of Law of supply, movement along the supply curve and shift in supply curve
within the reference of M&S company
Law of Supply
The law of supply state the direct relationship between the price of the products and its
quantity supplied in the market. It means when the price of the product will increase its quantity
supplied will automatically decreased (Hall, 2021). For example, Costa coffee is a product
which is offered by M&S to its consumers along with its other competitor’s name Sainsbury,
Tesco etc. So, in case if M&S will reduce its price of costa coffee than the supply of the costa
coffee in the market will increase as per the law of demand concept of micro-economics.
Movement along the supply curve
This concept state that movement in the quantity supplied of the products with the
movement in the price of the products, assuming other factors remain constant. This indicate the
direct relationship between the price and quantity supply of the commodity. The two types of
movement along the supply curve is expansion and contraction (Grübler, Ghodsi and Stehrer,
2021).
Table 3: Relationship between price and quantity supply of Costa coffee of M&S
Price per kg (£) Quantity supplied in kg
5 100
10 200
15 300
Figure 3: Graphical presentation of movement along the supply curve

Extension along the supply curve:
This is a concept which state that the increase in the quantity supplied of commodity with
the increase in the price of same commodity (Ge and Han, 2021). For example, on the basis of
above data and graph, the quantity supplied of the costa coffee of M&S company has increases
from 200 kg to 300 kg with the direct change in the price of costa coffee such as from £10 to 15.
This is because of the extension along the supply curve concept of micro-economics.
Contraction along the supply curve:
This means the decrease in the quantity supply of the product with the direct decrease in
the price of the product (Tapp, 2021). For example, the above data state that with the decrease in
the price of costa coffee of M&S company from £10 to £5 per kg, the quantity supplied of costa
coffee is also decreases from 200 kg to 100 kg. This might be because the company unable to
supply high quantity of products at the low price. Also, because of the movement along the
demand curve concept.
Shift in Supply Curve
The shift in supply curve means the change in the supply of the products of the company
because of the change in the factors other than the price of the commodity. This factors includes
price of substitute goods, cost of production, technology etc. This indicate that when the quantity
supplied of the products changes but the price remains same than this changes might be

occurring because of the change in the other factors. There are two types of shift in demand
curve such as rightward shift and leftward shift (Makarova and Nevzgodina, 2021).
Figure 4: Graphical presentation of shift in supply curve
Rightward shift in supply curve:
This concept state that when the quantity supplied of the products increases because of
the increase in the other factors, price remain constant than this is known as rightward shift in
supply curve. For example, on the basis of above graph if the price of the Costa coffee of M&S
company remain constant and its quantity supplied increases from Q2 to Q1 than it will be
known as rightward shift in the costa coffee supply curve. This rightward change in supply curve
might be occur because of the change in technology within the market.
Leftward shift in supply curve:
This indicate the decrease in the supply of the product of company because of the other
factors where price remain constant (Verbishchuk, 2021). For example, on the basis of above
graph, the price of the costa coffee of M&S remain same i.e., P but on the other hand quantity

supplied decreases from the Q2 to Q1 because of the technology in the market. Then, it means
the leftward shift in the supply curve of M&S costa coffee product.
TASK 2
Keynesian Growth Economic Theory in the 21st Century
According to this theory, the various realties and issues of the 21st century was discussed
by the Keynesian. This cover the various policies which the government have to implement
within the country in order to growth and develop the economy. The Keynesian theory of
economic has emerged in the 20th century but it is still relevant in the 21st century because British
economist John Maynard Keynes reviews the various short run and long run change in the world
economy. This theory has suggested different fiscal and monetary theories which helps the
government in expansion of its tax revenue. In the 21st century, this theory has focus on the likely
effect of the emerging financial crises on the economy and its output, consumption, investment
and employment. It means as per this theory; the author wants to analyse the impact of the
financial crises over the growth of the economy (Stockhammer, 2021). For this, the theory has
put their focus on the three most important factors such as savings, investment and economic
growth. It means as per this theory, the economic growth is a result of more investment and less
savings.
The Keynes theory state that the country has to use fiscal and monetary policies in order
to manage aggregate demand and prevent the economic recession in the present time. This theory
considers the demand side that affects the businesses practices of the present time. The main
objective of 21st century economic theory and policy is achieving full employment of the
available work force. It means total available workforce within the world will get the
employment to live their life and fulfil their dreams. This is possible only with the high level
maintenance of aggregate demand and the provision of sufficient production capacity. In this
way, the Keynes 21st century economic theory is related with the current businesses practices. It
is because in the present time, lack of workforce is the major issue that company are facing. To
deal with this issue the company also adopt various policies and practices so that their talent
workforce will not quite the job. As per the Keynesian theory, the consumers are the source of
income for the business who buy their products and services. In case if they will spend their

money more and save less, then the profit of the business will increase (Terra, Ferrari Filho and
Fonseca, 2021). Thus, this theory has focus on economic policy for the sustainable, growth and
development of economy.
Friedman’s economic theory
Monetarism was one of the significant economic theory of late 20th century which focuses on
effects of central banking and money supply at macroeconomic level. As per the arguments of
Friedman, the inflationary condition within the economy is inherent from that of excessive
supply of money and that the monetary authority should emphasize highly on stabilizing prices.
The theories formulated by Friedman are known as Monetarism which undertakes to reject many
ideas of Keynesian economics. It was considered as an attempt of conservative economists to
restore the wisdom of the classical recommendation. Friedman has argued that not possible to
have the condition like full employment of labour all the time and what is suggested is to leave
the economy to forces of market. Along with this, it has been argued that the attempt of
government to stabilize economy around full employment through monetary and fiscal policies
actually leads to greater economic instability.
CONCLUSION
The report has concluded the various concepts of micro-economic such as law of demand
and law of supply along with its implication within the M&S business. The report has also
critically analysed the movement along the demand and supply curve along with the shift in
demand and supply curve of products of M&S company using diagrams. Lastly, the report has
also compare the emerging economic theory of 20th and 21st century such as Freidman and
Keynesian economic growth theory and model.

REFERENCES
Books and journals
Cerreia-Vioglio, S. and et.al., 2021. Law of demand and stochastic choice. Theory and Decision,
pp.1-17.
Kiseleva, I. A. and et.al., 2021. Simulations of Supply and Demand Forecasting in A Market
Economy. REVISTA GEINTEC-GESTAO INOVACAO E TECNOLOGIAS. 11(4).
pp.1669-1684.
Grübler, J., Ghodsi, M. and Stehrer, R., 2021. Import demand elasticities revisited. The Journal
of International Trade & Economic Development, pp.1-29.
Hall, N., 2021. The British Debate Concerning the Supply of Cotton During the American Civil
War. The Journal of European Economic History. 50(2). pp.89-118.
Ge, J. and Han, X., 2021, November. Application of Big Data Analysis Technology in the
Construction of Cross-Border E-Commerce Supply Chain Platform. In International
Conference on Machine Learning and Big Data Analytics for IoT Security and
Privacy (pp. 331-338). Springer, Cham.
Tapp, R., 2021. Introducing the YIMBYs: Renters, housing, and supply-side politics in Los
Angeles. Environment and Planning C: Politics and Space. 39(7). pp.1511-1528.
Makarova, L. A. and Nevzgodina, E. L., 2021. THE SCOPE OF SUPPLY AND PROBLEMS
OF COMPETITION LAW. OF OMSK UNIVERSITY.
Verbishchuk, V., 2021. SUPPLY CONTRACT IN THE LEGISLATION OF
UKRAINE. Knowledge Transfer in the Global Academic Environment. Terminological
Basis of, p.158.
Stockhammer, E., 2021. Post-Keynesian macroeconomic foundations for Comparative Political
Economy. Politics & Society, p.00323292211006562.
Terra, F. H. B., Ferrari Filho, F. and Fonseca, P. C. D., 2021. Keynes on state and economic
development. Review of Political Economy. 33(1). pp.88-102.
1

2