Contemporary Business Economics: Demand and Supply Analysis

This report discusses the law of demand, movement along with the demand curve, change in the demand curve, law of supply, movement along with the supply curve, change in supply curve, and emerging theories and models in 21st century contemporary economics. It also relates these concepts to modern business practices using Burger King as an example.

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..............................................................................................................................10

INTRODUCTION
Economics is the study of the individual and their certain values in the particular
production, distribution and the consumption of the certain goods and services. This is majorly
emphasis on the behaviour of economist and their working style. There are certain factors which
reflect the demand in the target market and includes demand, supply, change in demand and
change in supply. This respective report is based on the Burger King, it is the multinational
company of hamburger fast food restaurants. The headquarter is in Miami-Dade Country,
Florida. This report will analyse the law of demand and also the movement along with law of
demand in the particular business. Lastly, it will analyse the certain theories and models that are
emerging in 21st century of contemporary economics.
TASK 1
1.1 Explain the law of demand, movement with the demand curve & change in the demand
curve with the help of appropriate diagram.
Demand is defined as the desire of the consumer in order to buy the particular products
and services backed with their sufficient purchasing power. This can be vary as per the change in
prices due to certain factors.
Law of Demand:
According to law, there is the inverse relationship between the prices and the demand of
the given goods as increase in the prices of goods and services implied in decrease the overall
demand of particular goods and services and vice-versa. All the factors remains constant. When
the prices of the given goods rise from P0 to P1 then the demand of the goods fall from OQ0 to
OQ1 and vice-versa. It shows the positive relationship between the price of the given goods and
the demand in the target market. In context to Burger King, when the prices of the burger rises
then the demand for such goods decreases as the nominal buyer will buy the affordable food
items.

In the given graph, the demand curve is sloping downward due to inverse relationship
between the prices and the demand of given goods. When the price of the products increases
from prices p3 to p2 then the demand of their burger fall down from q3 to q2 and can be more to
q3 as well. Whereas, as the prices of the goods decreases from p2 to p3 then the demand for such
goods increases from q2 to q3.
Factors affecting demand of the specific good are as follows:
 Price of the commodity: Increase in the prices of goods implied in decrease in the
overall demand of the goods in the target market. Where as decrease in the prices of
goods and services implied in rise in the quantity demand of burger of Burger King as the
customer will buy affordable commodities for their consumption.
 Price of substitutes goods: These are the goods that are having positive relationship
between the prices and the demand of such goods. As the substitute goods for burger king
is burger of MacDonald's so when the prices of substitute goods increases then the
demand for current goods also increases as the customer will buy affordable food items
or the goods which is available at lower prices.
 Price of compliments goods: these are the goods which can be combine used with the
other products and there is inverse relationship between the prices and the demand of the
such goods. Sauce is the complementary goods for burger and if the prices of sauces

increases then the demand for burger decreases as it leads to increase overall cost of
burger in the market and consumer will shift to their food items which are available at
minimum prices.
 Income of the consumer: It is related to the income of the consumer as it implied as the
rise in the income of the consumer implied the change in the demand for certain goods.
When the income of the consumer increases then the the demand for burger also
increases as they can buy the burger backed with their sufficient income level.
 Taste and preferences of the consumer: When the taste and preferences of the
customer are in favour of the given goods then this will implied in increasing the overall
demand of the particular goods and services. When the people are not liking the burger
then the demand of burger to fall down.
 Change in future expectations: This is directly related to the future availability of
goods and services in the market. When the customer is expecting higher prices of the
goods in future then the demand for such goods increases. This is directly impact the
overall functionality of the business due to change in the demand and the overall prices.
Change in demand curve:
It is defined as the Variation in the entire demand curve that can be commonly caused by
certain factors which includes the taste and preferences of their customer, change in income
level, prices of substitute goods and many more. In such case the demand curve tends to shift to
the right or life.

Change in the demand curve implied in change in the demand cure and it will shift to the
right when there is decrease in the prices of goods and services make rise in overall demand. On
other hand, there is decrease in the demand of the particular commodity. In this diagram, the
initial demand is D0 which shift to D1 or D2 due to change in the various factors that includes
the taste and preferences, income of the consumer, prices of complementary and substitute
goods.
1.2 Explain the law of supply with the supply curve and also explain change in supply curve with
suitable diagram.
Supply is the major concept which implied in the total available amount for the particular
commodity foe their customer. It is related to the amount of the goods at the specific prices
across the range of prices as per shown in the supply curve.
Law of supply:
According to this law, It is stated that there is the Positive relationship between Given
quantity and the price of the commodity And other factors remain constant. It shows that When
the price of the given commodity increases then the supply of the goods also increases on other
hand when the price of commodity faults down then the supplier will not Send the product In the
market for further sale. In contacts to Burger King When the prices of burger increases then the
company will sale more burger and if the price of burger decreases thent they supply less.

According to this law, this is given that supply curve is sloping downward As this is
showing the positive relationship between the supply of given goods and their prices. As per the
given diagram when the prices of commodity decreases from q2 to q1 and this results in
decreases in the overall prices of the commodity. There are various aspects Which is showing
positive relationship between the supply and the prices of given goods In the large market.
Factors affecting supply of the specific good are as follows:
• Costs of production: There are various aspects that is directly related to the cost of given
goods And when the prices of labor raw material and other factory cost tends to increase
then the overall supply of the community decreases in the target market. Whereas, the
prices of the factor of production tends to fall down the supply of burger increases by
which the suppliers can generate more revenue.
• Government Subsidies: These are the benefits which is being provided by the
government over the prices of the commodity and it is shown that increases or decrease
in the government subsidies reflect the overall price of the given product. This also helps
in improving the oral functionality of the business and increases in the prices of
subsidiaries tends to increase the overall prices of given goods.
• Technology: It is defines as the advancement and the innovation by which an
organization can reach to the heights and generate higher profits with the use of
innovative technology. It is the major concern of the business by which they can have
the better approach in offering certain goods and servicrs in the large market. Betterment
in the technology help in improving the overall supply of the given goods in the target
market.
• Objectives of firms: There are different types of ventures that are emphasizing on
welfare of the society and some of them the move them are meant to generate higher
profitability So can they can subtain the competitive market. Burger King is emphasising
on the product by selling them more with the aim of having higher profits.
• Weather: These are the factors which focuses on the supply of certain product and there
is having major impact on the commodity in the large market. In context to Agriculture
industry, there is huge impact in the industry as they are dealing in perishable goods.

Burger king is operating their business in food relating that commonly effects overall
functionality of business.
• More firms: This is the factors that defines that competition in the large market and in
comparison to the firms who are offering more revenue and meeting the competitve
edges in the market which also relfect the satisfaction level of goods and this also impact
in market. In context to Burger King, the overall supply of goods decreases due to
increase in the number of competitors who are retaining in the market for long period of
time.
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 due to change in the various factors. When the supply of given goods such as burger
increases or decrease then the demand for such goods also falls down in the large marketplace.
Increase in the supply shift the curve from s0 to s1 and decreases in the supply makes decreases I
the supply curve from s0 to s2.
As per the given diagram, it is shows that when the prices of the goods tends to fall down
the decreases then the supply of the certain commodities also fall down. When the supply curve
shift to the right which is due to 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 different theories that are basically analysed ans evaluated by the economic
growth rate ad also having the combination of the certain factors and these are explained as
follows:
Neoclassical Growth Theory
This the economic theory that basically helps in analysing the economic growth rate with
the combination of the certain aspects and that are capital, technology and labour. According to
the national bureau of Economic Research, Trevor and Robert Solow have the credibility of
launching such type of theories with the aim of ensuring long run economic development in
1956.

It is the theory which generally emphasis on the short-term equilibrium helps in getting
effective amount of impact in context to change in the economic environment and there is no
such development if the organisation can not introduce the advancement in their production with
the help of technology. This respective theory is different from the long term equilibrium which
does not require for these factors. This also accessed that the capital is have the major
accumulation of capital and they analyse that how the people use their capital which is vital foe
the economic development of the company. Furthermore, the relation of labour and the capital
decide the output from the firms and lastly the technology can decide the productivity of the
labour and also analyse the increase in the output of labour with the use of advancement in the
technology.
Keynesian Economics theory
These are the aspects which are having two assumption such as price and the wages which
are sick and also having the certain principles which shows how the overall economy will work
and first they analyse the aggregate demand which can influenced by the various economics
decisions and some times all the decisions can be taken by the private sector and also having the
major impact on the macroeconomics factors(Choi, 2018). This also includes the reduction in
consumer spending during high recession. Other point is price and wages that respond slowly in
context to the change the supply of the certain goods in the large market. 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
The economist and the author, Karl Marx is having the certain theories related to the
capitalism and communism. Marx was inspired with the political economists such as David
Ricardo ad theory own brand of economics. Marx argues is having the society which is the
mixture of two main components that are capitalists who understand the as the social and
economic system. This is also valid in the modern era. Capitalists are the business owners who
manage the process of production and responsible foe certain means of products which includes
the raw material, factories and tolls and all the things which are entitled for all the profits.
In the modern theory, it is the major concern with th aggregate demand that is affected by
the certain 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 above report, it is concluded that demand and supply is the aspects which is the
major consideration in the development of the economy. Price of the commodity, income of the
consumer, taste and preferences of their customers are the certain factors which is having major
impact on the demand. There is inverse relationship in the price and the demand of the given
goods. Supply is also being effected by various factors and these are subsidy, weather,
Objectives of firms, Costs of production and Technology. Moreover, neoclassical theory,
Marx’s Social Economic system and Keynesian Economics theory are the certain assumption of
the economics which also ensures the future development of the economy.

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