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

Contemporary
Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Law of demand and changes along demand curve.................................................................1
Law of Supply addition to changes in supply curve...............................................................3
TASK 2............................................................................................................................................5
Emerging economic theories in 20th as well as 21st century...................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Contemporary business economics is undertaken as the field that collectively work with
economic theory considering the business strategies and also helps in assessing organisational,
financial and market concerning environment of company. It leads to put emphasis on the
economic issues and problems in regard of the management factors of company. It is also helpful
for the ventures in terms of understanding several concepts regarding their business like income,
profit and concerning market structure (Zafar, Hafeez and Mohd Shariff, 2016). For this report,
Innocent Drinks in considered that deals in the production of smoothies and juices sold in
supermarkets, coffee shops and other outlets. Company is owned by Coca-Cola by 90% and sells
more than 2 million smoothies per week. It was founded in 1998 in London, UK by Richard
Reed, Adam Balon and Jon Wright. The report covers effective analysis of micro economic
concepts in regarding business considering the law of demand and supply. It also includes the
comparison among emerging theories in 20th and 21st century in relevance to the modern business
practices.
TASK 1
Law of demand and changes along demand curve
In regard of understanding the law of demand, it is required to know that what leads to
develop demand. It is the desire of customers to purchase particular products and services at the
mentioned price range. Apart from this, the law of demand represents the inverse relationship
among the prices of commodities and quantity demanded to keep the other factors constant. It
means that the demand decreases with the enhancement in prices as in regard of Innocent drinks,
when the prices of drinks increased then the demand of people automatically got decreased for it
and the reason being the affordability on other similar products (Bell and Sherlock, 2020). The
law of demand helps in understanding the reasons for suitable things which are priced at
effective level as they are identified as the significant opportunity for the purchase of products
which are being perceived for being under-priced. For instance, Innocent Drinks leads to boost
its production responding to enhance prices that have been urged by the flow of demand.
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In order to understand more with the help of above diagram, where the demand curve
slopes down when the prices of commodity offered by Innocent drinks shifts from P3 to P2 then
the demand also move from Q3 to Q2. In same manner, when the prices decrease from P2 to P3
then the demand also increases from Q2 to Q3.
Apart from this, the change in demand curve, depicts the enhancement in demand for the
particular commodity regarding the entire demand curve that will take a shift to right and also
same with the decrement in demand to left. In the above diagram, the initial demand curve, D0
leads to make proper shift to D1 or D2 that depends on the cause occurred by the change in
income, taste, prices of commodities, preferences and so on. also, there are certain factors that
impact the demand of commodity include:
Prices of products: Most of the people wish to purchase the needed products considering
their spending capacity so when the prices of products enhance the demand for the same then it
leads to decrease and simultaneously when the prices decreases then the demand increases
(O’Cass and Wetzels, 2018).
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