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

This report discusses the law of demand and supply, factors affecting demand and supply curve, emerging theories and models in 21st century contemporary economics and their connection with business practices. It includes a case study of Unilever. The report concludes that demand and supply are important wheels that ensure the flow of products in the market. The report also compares traditional and contemporary economic theories.

Contemporary Business
Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1Explain law of demand and movement with the same curve & changes in the demand
curve due to its factors................................................................................................................3
1.2 Explain Law of supply, movement along with the same & various factors which is having
change supply curve with the help of suitable diagram..............................................................6
TASK 2............................................................................................................................................9
Compare & contrast emerging theories & models in 21st century contemporary economics
with those of the 20th century and connect then with certain business practices.......................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business political economy is defined as a term which is studying the scarcity of the
resources and its implication in the production of products and services. It mainly concern with
the great variety of the certain complex and the issues that are emerging in the market.
Additionally the demand and supply are the important wheels which ensures the flow of products
in the market(Feng & et. al., 2021,). to the respective report, Unilever is the selected as business
for this respective study, it is the international company and its main office is in London
England. Such organisation is dealing in the in consumer goods which includes the condiments,
ice cream, minerals and supplements, coffee, tea, air purifier and many more. The company is
the largest producer of soap in the world. There are owning more than 400 brands and generating
the revenue of more than 51 million euros. This respective document will evaluate the law of
need and activity and also analyse the shift along with the demand and supply curve. Moreover,
this will compare between the certain theories which are rising in 20th and 21st century.
TASK 1
1.1Explain law of demand and movement in the same curve & changes in the demand curve due
to its factors.
As per the Law of demand, it is stated that it is inverse relation between the prices &
quantity demanded in the large market. With the other factors remaining changeless, change in
the prices of the goods implied change in the demand of given good in the reference market. For
say, when the prices of the given goods about to rise then demand of commodity decreases as
the consumer will not move for the expensive goods. Where as when the price of the given goods
tends to fall-down then the demand of the such products rises due to having sufficient purchasing
power of the buyer. In relation to Unilever, when the prices of the services tends to rise then the
needfor their products decreases due to their higher prices and vice-versa.

According to given diagram, it is showing that the demand curve is sloping downwards to
having inverse relationship between the prices and the quantity demand of the given goods. For
example, when the demand of the commodities increases from p3-p2 so the quantity demand of
the goods falls from q3-q2 & likewise.
Factors that are affecting demand curve with the help of diagrams:
 Price of goods: When the prices of the given goods is about to rise then the demand of
the given goods tends to fall-down. Whereas, when the prices of the goods fall-down then
the need for the goods rises as the consumer will always will love to buy affordable
goods. In reference to Unilever, when the prices of the such products decreases then the
demand for their goods increases and vice-versa.
 Income of the consumer: With rise in consumer income, the demand for such goods
also increases as more disposable income tends to have the more demand in the large
market and the consumer will always ask for premium quantity products. In context to
Unilever, people with more income level will buy more commodities of them and implies
in rising demand of the goods.
 Preferences of buyer: When the consumer is liking the product then it implies in
increasing the demand of the given goods and the consumer will buy more products. On
other hand, when the people is not liking the products then the demand of such goods

fall-down. In relation to Unilever, when the buyer is having similar demand with the
given products then the demand f such goods increases and vice-versa.
 Price of substitutes commodities: These are the goods which can be easily replaced by
the other goods giving same level of satisfaction in the larger market segment. Hence,
when the prices of the goods of Unilever increases then the need for the other competitive
firms increases who are offering similar products in the large market.
 Price of compliments commodities: These are the goods which can is used as the
junction of different goods or used together. This is having positive relationship between
two products when the prices of the main products increases then the demand of their
complementary goods tends to reduce in the big market. They have better approach in the
market as the consumer can choose the respective products out of available options.
 Change in future expectations: this is basically the change in the availability of goods
in future so the consumer increase their demand in current time which leads to increase
the demand of the products of Unilever and vice-versa.
Change in demand curve:
This is referred as the change in the entire demand curve because of the variation in the
certain factors which includes the price of secondary goods, price of antonymous goods, taste
and preferences of the customer and the upcoming days expectation of the buyer. In this case, the
demand curve will shift to the left or right.

AS per the given diagram, the demand curve basically shift in the demand curve to the
right and can be shift to the left. When the demand of the goods rises then the demand curve then
the demand curve will shift to the right. On other hand, reduction in the demand of the given
goods implies in shift in the demand curve to the left. In the given diagram, As per the given
diagram, increase in the demand of the given goods then the demand curve shift from d0 to d2
and vice-versa.
1.2 Explain Law of supply, shift along with the constant & various factors which is having
change supply curve with the help of suitable diagram.
Supply is the concept that describes the total amount of specific goods and services which
are available to customers . It can be related with amount available at a particular price. It can be
in manufactured goods, labour hours, material required, or any important object.
Law of supply
It is said that all the factors being constant ,as the price of goods rises,the amount of
goods that suppliers offer will grow and vice-versa. On higher price will bring on producers to
supply high quantity in the market. Law of supply is positive relationship between quantity
supplied and price. In context to Unilever, it provides great amount of supply to its market and
with keeping supply and price constant its business is working effectively and getting spread all
over the world day by day.

As per diagram there is a direct relationship between price and quantity supplied so when
price is at p3 quantity is on q3 and after rise in price which is (p3-p2) there will be a rightward
shift of (q3-q2) and this repeats when (p2-p3) there will be (q2-q1)
Factors Affecting Law Of Supply are given below:
 Price of the granted Commodity: it is foremost factor determining the supply of goods
is its price. And supply and cost are directly linked. It says when price increase , the
quantity provided is also rising and it goes vice-versa. It is because at higher prices, there
are great chances of making benefits. It generates Unilever to offer more for sale in the
market.
 Prices of Different Goods: As everything has a secondary uses, the measure supplied
count not only on price but also on other commodity prices . Rise in price of other goods
makes them more beneficial in comparing with given goods.
 Prices of Factors of Production (inputs): Amount owed to factors of production and
price of input rises, the cost of production in Unilever also rises. This falls the profits. In
consequence, marketer decrease the supply of goods .
 State of technology: Unilever manipulates the supply of goods. Highly advanced and
developed technology decreases the cost of manufacturing, which increments the net
profit perimeter or expired application will rise the cost of production and will lead to
decrease in supply.

 Government policy( taxation policy) : With high tax rate there is also increases the
cost of manufacturing , which rises the margin of benefit of Unilever. Tax grant and
concessions additions the supply as they make it more beneficial for Unilever to supply
products.
 Goals/objective of the firm: Mostly, supply of goods increase only at high prices as it
accomplish the goal of maximising earnings . However, with alteration in environment,
some firms will be inclined to supply even more at same prices, which do not exploit
their profits. The goal of Unilever is to acquire extended market and to raise their position
and standing.
Change in supply
It refers to shift to left or right , basically a change in supply is an increase or decrease in
then quantity supplied that is alternate with a high & low supply price. A change in supply is not
to be confused with a change in the quantity supplied.
In the above diagram there is a shift to left which is showing higher cost of production ,
higher taxes and fall in productivity and the supply curve will shift to right when supply is higher
but prices has stayed the same.

TASK 2
Analyze & contrast rising theories & models in 21st century contemporary economics with those
of the 20th century and connect then with certain business practices.
There are various theories that is being analysed and evaluated by the economic growth
rate and also accessing the certain combination of various factors and these are given as follows:
Traditional Economic Theories
Neoclassical theory: It is the respective theory which is developed with the effective
consideration of Carl, Leon Walras. The basic emphasis of this theory which is related to the
supply and the demand as these are the driving forces behind pricing and production by which
they can have the fuller utilisation of the commodities and the resources. In context to Unilever,
this theory says that preferences and taste of the company is different and they are having the
demand in context to the current consumption as the person is having the certain assumption of
the product of Unilever.
Keynesian Economics theory: This is the theory which is working on the basis
consumption that prices of the goods and the wages of the employees are fixed which is helps in
ensuring effective working. The first aspects is the aggregate demand that can be influenced by
the various decisions that is taken by the private organisation and having direct impact on the
revenue and the macroeconomics outcomes that also includes the reduction in the consumer
spending during the high recession period. Other aspects is related to the wages and the prices of
the goods are fixed. The last aspects is the aggregate demand that can be anticipated or
unanticipated which is having direct impact during the prices and the employment.
Contemporary Economic Theories
Behavioural theory: This is the theory which is given by the Richard Thaler and they are
having certain combination of psychology. This also helps in understanding the reason for the
particular behaviour given by the people as they are living in the real world. In context to
Unilever, this theory helps them to understand the behaviour of their employees towards their
working which also helps in effective communication of the individual. In the time of pandemic,
it is the theory that is used by the individual who is aiming to reduce the overall cost within the
organisation.
Nudge theory: this is the economical concepts that is having indirect suggestions with
the proper enforcement and also reflect the behaviour of the people for having better decisions.

In context to Unilever, this theory helps in understanding the environment by which they can
have the automatic cognitive processes for having the better results. They are further taking the
main consideration of getting better results and they can also use this theory for having better
results. They also make the best use of the individual foe taking better decisions and majorly for
their financial considerations.
Comparison and Contrast of Traditional and Contemporary Economics Theories
There are certain aspects which is enlisting the certain contemporary theories that are
sustaining in the business economics In relation to the Unilever is given below:
context to British gas company is given below:
Compariso
n basis
Traditional economic theories Modern economic theories
Keynesian
Economics
theory
Neoclassical
theory
Behavioural theory Nudge theory
Objective In context to
Unilever, they
are conducting
with the sole aim
of having
establishing the
principles which
says that the
price and the
wages are fixed
which can work
in the changing
environment
This is the
theory in which
they emphasis
on the supply
and demand of
the commodities
as these are the
driving forces in
consideration to
the production
with proper
consumption of
the goods.
The main objective
of this theory in
context to Unilever
is to analyse the
reaction of the
consumer that how
they are behaving in
an appropriate
manner.
It is the theory
which emphasis
on shaping the
company in the
market as this also
being selected by
the other person
over other.

CONCLUSION
From the above report, it is concluded that company is operating in the economy and
emphasis on generating higher revenue in the market which also ensures the flow of products
and services in the large industry. Demand in the market is being taken in the large market and
also having the main consideration which also leads to have the better approach in the large
market. Price of substitute, income of the consumer, future expectation of the buyer influenced
the overall demand of the given gods in the market. Where as cost of production, number of
firms are the major consideration which impact the overall supply of the given commodities in
the marketplace.

REFERENCES
Books and Journals
Grübler, J., Ghodsi, M. and Stehrer, R., 2021. Import demand elasticities revisited. The Journal
of International Trade & Economic Development, pp.1-29.
Feng, G. and et. al., 2021, March. Research on the Demand Distribution of Aviation Equipment
Maintenance Spare Parts. In 2021 IEEE 6th International Conference on Big Data
Analytics (ICBDA) (pp. 301-304). IEEE.
Scheutz, M., 2017. Demand and charitable supply: Poverty and poor relief in Austria in the 18th
and 19th centuries. In Health Care and Poor Relief in 18th and 19th Century Southern
Europe (pp. 52-95). Routledge.
Shapiro, D.B., 2018. Payment to egg donors is the best way to ensure supply meets demand. Best
Practice & Research Clinical Obstetrics & Gynaecology, 53, pp.73-84.
Grübler, J., Ghodsi, M. and Stehrer, R., 2021. Import demand elasticities revisited. The Journal
of International Trade & Economic Development, pp.1-29.
Choi, H., 2018. Disproving Market Demand and Market Supply. Available at SSRN 3203158.
Chen, X.M. And et. al., 2018. Spatial visitation prediction of on-demand ride services using the
scaling law. Physica A: Statistical Mechanics and its Applications, 508, pp.84-94.
Opeskin, B., 2021. Rationing Justice: Tempering Demand for Courts in the Managerialist
State. University of New South Wales Law Journal, Forthcoming.
Taghizadeh-Yazdi, M., Farrokhi, Z. and Mohammadi-Balani, A., 2020. An integrated inventory
model for multi-echelon supply chains with deteriorating items: a price-dependent
demand approach. Journal of Industrial and Production Engineering, 37(2-3), pp.87-
96.
Grübler, J., Ghodsi, M. and Stehrer, R., 2021. Import demand elasticities revisited. The Journal
of International Trade & Economic Development, pp.1-29.