Contemporary Business Economics: Demand and Supply

BM533:
Contemporary
Business Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Explain the law of demand, movement with the demand curve and changes in curve (with
the suitable diagram)...................................................................................................................3
1.2 Explain the law of supply, movement with the same supply curve and changes in curve
(with the suitable diagram)..........................................................................................................6
TASK 2............................................................................................................................................8
Compare & contrast emerging theories & models of 21st century and 20th century in
contemporary economics and relate both of these to modern business practices. .....................8
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Economics is the study of limited resources that is concerned with the manufacturing and
distribution and use of products. It also identifies how producers are allocating their resources
and using them effectively. The field of business economics explains the strategies, practices, and
the profit making and also studies external factors and influence on decisions of change in rules
and regulations (Ciacci and et. al., 2021). The cooperate situation is highly changing and has
observed giant deals. For this respective report Adidas is the chosen organisation, it is German
international company which was found in 1949 and the main office is in Herzogenaurach, it
deals with manufacturing of shoes,clothing and accessories and it is biggest sportswear in
Europe. In this report the concept of demand and supply will be explained and further the
changes and shift in demand & supply curve due to some factors along with law of demand and
law of supply
TASK 1
1.1 Explain the law of demand, movement with the demand curve and changes in curve (with the
suitable diagram)
Demand is the economical law defining customers tendency to buy the products and
eagerness to pay the amount for the particular goods and services. With keeping all factors
changeless, rise in price of products will decrease the quantity needed and same goes on further.
Law of demand remains an important concept in economics and this explains how market or
companies allocate their uses and define the price accordingly. The demand concept tells that
rising price of commodity will lead to an equal fall in demand(Daouia and et. al., 2021).
In given figure, firstly demand curve D0 shifts to become either D1 Or D2. With increase in
price the demand will go to D0 to D1 and with decrease in price D0 will go to D2 because when
prices are high demand is always less and when prices are lowered then demand will rise. It can
be a causes by the change in the financial gain, preferences, price of utility or complement
goods or change in the future prospect..

Factors affecting law of demand
 The income of people : the demand for Adidas products depend son income of
customer . An rise in income of consumer will be an advantage for buying Adidas latest
collections . High demand causes the curve to shift to right. Accordingly, diminution in
income lessens consumer buying power, and then consumers purchases in little amount
and thus the curve shifts to left.
 Taste and preference of consumer : for certain products , it determines how customer
bear the purchasing of product. Change in trend , environment and fashion also leads to
shift in curve if consumer have good taste and choices their demand will be rising and the
curve will shift to right (Duxbury, 2021). In contrast, some products go out of trends and
customer no longer remain in their favour and in that situation the curve will shift to left.
 Changes in prices of related goods : the demand for some goods is stricken by the price
of other products in market specially the substitutes and complimentary goods(Gaspars-
Wieloch, 2021). Rise in prices of interconnected goods powers the customers to shift
from one product to other . When price of shoes and income of customer stays same , but
the slippers process fails, consumer will demand less in shoes since shoes are closely
substitute of slippers, then customer will shift from shoes to slippers . The demand for
slippers shift to right but demand for shoes will shift to left.