Contemporary Business Economics Demand and supply

This report explains the law of demand, movement along the same demand curve and changes in demand curve with suitable diagrams. It also explains Law of supply, shift along with the constant & different factors which is having change supply curve with the help of suitable curve. It compares and contrasts emerging theories and models in 21st century contemporary economics with those of the 20th century, and relates both of these to modern business practices.

Demand and supply

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Explain the law of demand, movement along the same demand curve and changes in
demand curve with suitable diagrams .......................................................................................3
1.2 Explain Law of supply, shift along with the constant & different factors which is having
change supply curve with the help of suitable curve.......................................................................6
TASK 2 ...........................................................................................................................................9
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. .............9
REFERENCES..............................................................................................................................10

INTRODUCTION
Economics is the study of knowing what is missing in firm and how to use the resources
in a way so that they can be helpful for the company. It is involved in making products , growing
and social welfare all over the time period . It is the constructive view of every economic
strategy or theory used in the company for going with flow in the market. In the respective report
of Asda the particular product which is chosen is dairy items and there will be discussion on law
of demand of the products, movement with the curve with suitable diagrams and law of supply,
movement in supply curve along with the suitable diagram representation (Trigo and et. al.,
2022). It is the brand name in grocery retail market and it was founded by peter and it has its
main headquarter in Leeds, UK and it deals in grocery items and financial services. The owner of
the company are The issa brothers TDR capital and the subsidiary is Asda mobile.
Task 1
1.1 Explain the law of demand, movement along the same demand curve and changes in
demand curve with suitable diagrams
Demand in economics can be explained as the temperament of any consumer to select or
buy any goods but at the same time can be able and ready to pay for it at various price plane in a
given time period. It is the inclination of customer to buy commodities to give a price for a
particular product (Vakulabharanam, 2022). With keeping all other factors same if there will be a
rise in prices of products, the demand of the dairy products will decrease as consumer will not
buy them at high prices because it the ability to use up the money, it shows that how much a
buyer can spend on a specific commodities according to his income.
Law of demand explains the inverse relationship between price and demand , for elaboration it
can be said that demand changes with rise in price and fall in price. In context with Asda it is a
basic thought that when prices will rise there will be decrease in demand and when prices will
fall there will be increase in demand . It simply defines that the consumer behaviour of demand
and price of dairy goods (Achiume and Lake, 2022).

From the given curve we can clearly witness that when the price of the good rises from price p3
to p2, then the quantity demand for the same product decreases from Q3 to Q2 to Q3
accordingly.
Factors affecting demand shift are as follows:
 Taste and preferences: It is important to keep consumer preference on the top and it is
one of the important factor of economics which classifies the difference in price and
demand. When there will be a rise in price, then the demand for dairy products will fall
down and if price of commodity falls then the demand for that specific good will
increase.
 Income of consumer: As income is the basic amenity of every worker whenever
someone is working in an organisation, he will be working there for earning and improve
his living standards and fulfilling his needs (Broadstock and et. al., 2022). So when the
income of employee is high then he will be capable of buying the dairy products of Asda
and if his income will not be up to the mark then he will not be able to buy the product
and then the demand will get affected.
 Change in the price of related goods: As the dairy products are interlinked with each
other and if price of one changes , it also influences the price of other goods. For
example, if price of milk will increase then the price of cheese would also increase as

milk is used in production of cheese, so the prices will differ according to prices of
related goods.
 Number of consumer in the market: Number of consumers plays very important role
in environment as it is the factor which will make change in demand. When there will be
more of consumers for dairy products then the demand for dairy product will increase and
when there will be less consumers for dairy products then the demand for dairy product
will fall down.
 Consumer expectations: As consumer is expected to hope for the good future prices so
when consumer will have an idea that prices of dairy goods can rise then they might buy
the product in bulk and he will be able to store the products in a way that he can use it in
the coming time.
 Price of product: Price is important aspect of economic to identify whether the product
is affordable or not and then to classify that it is totally on the consumer that he either
buys it or not. When price of the dairy products will be in favour of consumer then he
will be in a position to buy the product and when the prices are high and he is not in
favour of high prices then he will be in position to not buy the product as it will not be
affordable (Cao and et. al., 2022).
Change in demand curve
This is defined as the change in the whole demand curve because of the alteration in the some
factors which involves the price of subsidiary products, price of complementary goods, taste and
liking of the consumer and the coming days the expectation of the buyer. In this situation, the
demand curve will shift to the left or right.

As per the given curve, the demand will shift in the given curve to the right and can be shift to
the left. When the demand of the commodities rises then the demand curve then the curve will
shift to the right. On other side, decrease in the demand of the given goods relies in shift in the
curve to the left,as per the given diagram, rise 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 & different factors which is having
change supply curve with the help of suitable curve.
Supply is a basic concept which explains the total amount of particular products
which are availed by consumers. It can be said that the amount available is accompanied with
particular price of the product. It can be ready products, labour time period, raw material needed
or any necessary elements.
Law of supply
It can be said that with keeping all the factors constant, the price of products will increase
& the amount of products that provider offer will also increase . On high prices producer will be
supplying even more amount of goods, it is positive relationship between quantity supplied and
price (Devine and Ash,2022).

As per the curve, there is a straightforward link 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 continues when (p2-p3) there will be a shift (q2-q1)
Factors affecting law of supply of dairy products:
 Price of commodity supplied: As it is positive relationship between price and supply so,
when prices of commodity will increase than the quantity supplied will also rise. This is
because at high prices there are high chances of earning more profit and there are some
benefits also like enhancement of quality.
 Natural conditions: as there are times when the weather is not in control and due to the
change in weather, the supply of raw material can be delayed and due to that the
production of dairy product will be slowed down and then the supply of the dairy product
would be decreased.
 Factor prices and their availability: It is the major determinant of supply, the inputs
like raw material, machines and the equipments are some factors. If the factors are
available in good quantity and at a lower, then there would be increase in production.
 The state of technology: Technology influences the supply very randomly as it is very
basic and advanced in nature and it helps in reducing the cost of production, which
improves the margin of profit (Gebbels, 2022). However, technological degradation or

complex and expired technology will rise the cost of manufacturing and it will led to fall
in supply.
Change in supply
In the above representation there is a shift to left which is showing high cost of fabrication ,
higher income improvement and fall in ratio and the supply curve will shift to right when supply
is higher but prices has stays changeless.
TASK 2
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.
There are a lot of theories given by well known and expert economist in 20th and 21st century,
some of the theories are also defined with full details and briefing and there are two traditional
theories which are discussed below in the respective report of :
Neoclassical theory: It is the broad approach that helps to know the production, pricing,
consumption of commodities, and income distribution through supply and demand. It collects the

cost of production theory from classical economics with the concept of utility maximisation and
marginalise. There were some new tools that were introduced such as indifference curve and
marginal revenue curves were used , these were introduced for improving the sophistication of its
mathematical approaches, boosting the advancement of neoclassical economics. It is primarily
concerned with the efficient allocation of limited productive resources (Langevoort, 2022). It
also involves the growth of every factor in a long term which allow for expanding the production
of commodities. The law of diminishing marginal utility states that as the quantity consumed
rises, the marginal utility falls. The marginal utility can even turn negative beyond a certain level
of quantity.
Keynesian theory: This was the theory given by Keynes to help monetarism in which he argued
that investment, which responds to changes in the interest rate and to expectations about the
future, is the dynamic factor for determining the level of economic activity and he also
maintained that careful political power action could foster full employment. He put this thing
into consideration that government can directly influence the demand for the commodities by
changing tax policies and public disbursement (Lv and et. al., 2022).
Starting in 1970, Keynesian was eclipsed in its influence by monetarism, a macroeconomic
school that individually managed the rise in money supply as a means of harming the recessions.
Following the global crisis of 2007-08 and continues with great recession, interest in ongoing
theoretical refinements of Keynesian economics.
There is one contemporary business economic theory which is discussed in this respective report
of :
 Marx's Economic Theory: Karl Marx is a well studies and well-cited economist who
raised his voice against capitalism system, society would divide themselves into two
classes first was the business owner and the second was the employees, the price of the
commodity depends upon the amount and time of the labour that has been devoted at a
time of production. As Marx believed that labour was the only factor of production for
the production of goods and services so he suggested to employ more number of workers
as this will increase the price of product as well as increase the purchasing power of
consumers by giving them employment (Martek, 2022).
Relation between both theories to modern business practices:

Neo- classical theory focuses on one's reference point which is that a consumer will only
consume the amount of the commodities according to his current income and if the income of the
consumer increases then the consumption will automatically increase which also defines the
equilibrium point in the market. In modern businesses, companies can apply this theory by fixing
the prices of their products at that rate where both consumer and seller are ready to do business
and that will also help to increase the revenues. Whereas, Keynesian theory focuses on the labour
employment and states that when the employment increases the real income and the consumption
will also increase (Novak, 2022). In modern businesses however, companies can apply this
theory by employing more labours that will increase the employment and at the same time the
purchasing power of the consumers which directly increases the sales of the company.
CONCLUSION
In this respective report, we can conclude that how law of demand and law of supply can change
the supply and demand and how the factors of demand that are price of commodity, taste and
preference and technology change the demand and how factors of supply like price of
commodity and natural conditions affect the supply of the product. Furthermore, there was
discussion on the theories of 20th and 21st century and how the theories helped in making the
condition of the organization better and efficient.
REFERENCES
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