Contemporary Business Economics: Law of Demand and Supply, Emerging Theories and Models

This report covers the law of demand and supply, including the factors affecting them and the changes in their curves. It also discusses emerging theories and models in 21st century contemporary economics and compares them with those of the 20th century. The report relates these theories to modern business practices. The subject is Business Economics, and the course code is not mentioned. The report is relevant to students of business and economics in any college or university.

Contemporary
Business Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
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...................................................................3
1.2 Explain the law of supply, movement along with the supply curve and also explain change
in supply curve with suitable diagram........................................................................................6
TASK 2............................................................................................................................................9
2.1 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
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business economics is the course area that follows the section about the financial management,
market trends and environmental issues that are faced by the business. It is also deals with the
framework that are linked with the lack of resources and the manner that how it can be efficient
utilised. The organisation consider in this report is Sainsbury. It is second largest chain of
supermarkets in the UK that was established in the year of 1869. The following report covers law
of demand and supply that are discussed and also evaluate the certain variations that take place in
demand and supply (Al-Abdallah, Fraser, and Albarq, 2021). Hence, it will also covers the
theories that are rising in 20th and 21st century in contemporary economics.
TASK 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.
Demand is the situation that present the wants of the individuals in terms of buying
certain products and facilities. As they also willing to pay the cost of the certain products in the
field of market place.
Law of demand -
The law of demand is termed as the reserve relationship between the cost of the products
and the certain amount of the products. As there is no variations in the other factor or they will
remain invariable. For example, if the cost of present product will raise from p0 to p1 then it will
shows the demand of the products decline from q0 to q1 and conversely. It indicates that the
purchaser only purchase the products when the cost are low and they are getting what they
paying for the goods (Aljaaidi, Sharma, and Bagais, 2021). At the time of discussing about
Sainsbury, when the present cost of the Dark chocolate will raise then the group of potential
consumer will not purchase the dark chocolate as they can shift to other brands or goods in an
effective and in efficient manner.

As according to the above diagram it has been shown that when the demand curve is
sloping down as the costs of the presented product will maximise from P3 to P2 (Brathwaite,
2021). As it will get effected to be decline in global demand of the trade goods in the market
from q3 to q2 and then shift to q3 and conversely.
Factors affecting demand of the specific good are as follows - Price of substitutes goods – These are the products that can be replaced by other products
and it will have opposite relationship among the cost of the present products and the
demands of the substitute products. For example, it has been presented that when the
costs of the Dark chocolate will decline then the demand for such particular product will
raise and conversely. Price of the commodity – As it is termed that when the cost of the products will raise
then the demand for the presented product will tends to decrease as the customer that will
shift to low-cost products in the market (Brathwaite, 2021). When the cost of the present
products that rends to decrease the target market then the demand for products that tends
to maximise. Price of compliments goods – It can be termed as the products that are used as the
concurrence of other products. It have positive relationship between the cost and the

demand of the adjunct products. When the products of the Mix chocolate maximise then
the demand for Dark chocolate will decrease it will not valuable with their complement
products. Taste and preferences of the consumer – In the present field of market trends,
individuals have dynamical demand in the market place as according to their taste and
choices in the market (Brown, and Cowling, 2021). In relation to the Sainsbury, when
individuals are liking the Dark chocolate then the demand for such products that tend to
raise and in manner of not liking the products and facilities by the consumers who are
leading to slow down the process of demands of the products. Change in future expectations – It will directly linked to the global supply of the goods
for furthermore sections. When effective purchaser are expecting shortfall of the
particular products in the future then they tends to maximise their demands in the present
field of market through which they can have effective products in enough amount. For
example, when the cost of the given products tends to raise in the target market then the
supply of the products will face fundamental implications of several products in the target
market.
 Income of the consumer – It involves the factors that are directly linked with the
demands of the presented commodities as when the income level of the customer will
raise then the demands for the presented products (Burton, and et.al., 2021). It also
maximise higher level of income that tends to raise the buying power of them through
which they have an effective goods.
Change in demand curve -
It defined to the changes in the overall demand curve that are the reason of changes in
several factors that engage variations in the costs, income of the customer, preferences and
choices of consumer and variations in the global cost of the products. It make shift the demand
curve to the left or to the right.

As according to the above diagram, it will shift to the global demand curve that it will
lead to the right in case of demand is to maximise due to declining in the present costs of the
products and facilities in the large market (Fernandes, and et.al., 2021). As per to it, the primary
demand curve is D0 but by the changes in the cost that can be say when the cost of the products
will tend to increase or decrease the demand curve that will shift to D1 to D2. As there are major
impact of the several factor that involves choice and selection of the consumer, cost of substitute
products, income of the customer and the future expectations of the purchasers as in effective
and efficient manner.
1.2 Explain the law of supply, movement along with the supply curve and also explain change in
supply curve with suitable diagram.
Supply is termed as the basic concept that are enlisting the global availability of the
products for future sales to their potential purchasers in the field of market (GONG, LIAO, and
CHEN, 2021). It is also linked to the certain costs of the products in the target market as
according to the graph
Law of supply -
The law of supply will relates to the positive relationship among the quantity that are
supplied and the cost of the products in the large market and other factor that are being

invariable. When the cost of the commodities maximise then the supply of the goods that also
maximise by the supplier as they would like to sell their goods at higher cost through which they
can make sure an effective term of profitability in the field of market place (Korobkov, 2021). In
relation to the Sainsbury, when the cost of the milk chocolate tends to raise then the supplier will
sell more of their quantity in respect to have higher amount of profit as effectively and
efficiently.
In the above diagram, it has been presented that the supply curve is increasing and by
having positive relationship between the cost and the quantity that are supplied of the present
products in larger market. As per to above figure, when the cost of the products was at P3 then
the supplier also providing Q3 but with the variations in the costs of the commodities that tends
to maximise the cost of the products from P3 to P2 (Krawczyk-Sokolowska, Pierscieniak, and
Caputa, 2021). It indicates the maximisation level in the supply of the products from Q3 to Q4 as
the supplier also raise the supply in an effective and efficient manner.
Factors affecting supply of the particular products that are discussed below -
 Government Subsidies - By maximisation in the government subsidies that also leads to
decrease the price of products. By it, when the costs of the subsidies increase then the
supply of the commodity will also raise. In relation to the tax rates that can also decrease
the supply of the present products.

 Costs of production - In the present management, they can provide any section of
production but it also have an impact by deficiency of the demand of raw material and
lower income of the workers. When the price of production tends to decrease so it will
lead to decrease the global price of the goods and the services (Kristiansen, and
Schweizer, 2021). In relation to the Sainsbury, when they have enough raw material then
it will minimise the global supply of their products.
 Technology - It is termed to the innovation or the growth in the technology through
which the management can suitably decrease their operating price. It is the fundamental
consideration through which they can utilise the innovation and the techniques. At the
time of business that are increasing the technology that also lead to maximise the supply
the products by decreasing in the global cost of the business.
 Weather - Such products that have direct effects on the profitability of the business.
Sainsbury is the retailer sector and there is high effects of the weather on the products in
the present business. In respect to have an effective goods the management should know
that the effects of the weather on the global profitability of the business.
 Objectives of firms - When the business is performing with the sole target of producing
more profit then they just sale their goods at higher cost. But when the business have the
consideration of doing the social benefits then they only deals with selling of their goods
inversely of their cost.
 More firms - By higher term of challenges in the market place, there is fundamental
impact of business that are providing effective goods to them and make sure that they
also offers higher profitability of the management (Panasiuk, 2021). When there is
declination in the costs of the goods then the supply of the present products tends to
decrease.
Change in Supply Curve -
It define to the shift in the global supply by having variations in the several factors that
also have an impact on global supply of the present products. It involve taxes, production price
and technologies. When the supply of the products tends to increase then the supply curve shift
from S0 to S1. As when the supply of the products tends to decrease then the supply curve shift
from S0 to S2.

As according to the given diagram, when the presented cost of the commodities tends to
raise then the supply of the products will also increase (Saliy, and et.al., 2021). It will shows that
the supply curve will shift to S to S1 and the cost of the products will minimise the supply of
certain products that will decrease by lower cost in market.
TASK 2
2.1 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.
As there are several theories that are presented through the economist that are present in
the 20th and 21st century and all the management are utilising several theories that are as
discussed below - Neoclassical Growth Theory – It is an economic theory that covers economical
development of the company and they have collection of three components such as
technology, capital and labour. Economists have presented that the credit of promoting
the long run economic development in 1956 as according to the national bureau of
Economic Research (Tariq, and Bai'th, 2021). It is the theory that defined the short term
reaction that also results from diverse set of labour and capital in their production. It is
the theory that have higher amount capital and labour in their production. This theory

also discusses the changes that have significant role in the development of the economy
and there is no growth when the management is not utilising technology of the
production. It is termed that short term that present in diverse section from longer period
of time that does not require any components (WEN, and WANG, 2021). It is the theory
that have the collection of the capital of the economy and the manner that how the
individuals are utilising capital through which they can make sure the technological
growth also. Marx's Social Economic system – It is termed as the theory that are presented by the
economist, Karl Marx about the capitalism and the communism. As they were motivated
with the classical, political and as well as economist like David Ricardo who have their
own sections of the economics. They have contend with the community that are
combination of two fundamental classes such as capitalists in which they know that
economic and social system will be supportable in the contemporary world. Capitalists
are the firm owners who basically maintain the procedure of production and the
responsive for the several sections that are being maintained by the person of the
particular production termed that it involves tolls, raw material and factories that are
entitled to have higher term of the profits.
 Keynesian Economics theory – It is termed as the products that have the assumption of
their costs and the incomes that are suitable in nature and it also manages that how the
economy will work in the dynamical environment (Wójcik, 2021). As there are three
factors that are aggregated demand, cost and as well as income that indicates the
utilisation of particular resources in a suitable way that will lead to have improvement in
the management in the larger term of the market place.
CONCLUSION
From the above mentioned report it has been concluded that, the supply and the demand
are the factors that are making sure the higher term of profitability and flow of products and
facilities in the larger field of the market place. Supply is having positive relationship among the
cost and the quantity that are supplied of the presented products and the services as according to
the costs that maximise the global supply of the products that tends to increase and conversely.
Demand is an essential factor that have inverse relationship among the cost and the demands of
the cost that maximise then the demand of the presented products that tends to decrease as

according to the presented figure. Hence, there are several sort of the theories Marx's Social
Economic system, Keynesian Economics theory and the neoclassical theory that are raising in
the 20th and 21th century and also contributing to the advancement and the betterment of the
management.

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