Contemporary Business Economics: Laws of Demand and Supply

Contemporary Business
Economics

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Law of demand.................................................................................................................3
1.2 Law of supply...................................................................................................................8
TASK 2..........................................................................................................................................13
Comparing and contrasting the 21st and 20th century economics theories and model........13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Micro economic is the core part of the business that studies the behaviour of the business
and the firms with respect to taking decisions regarding appropriate allocation of scarce
resources. It studies about how the things happen when there is change in the factors such as
price resources and all factors. Economic is also a process which is used for determining the
price of the product based on the demand and supply of it. It establishes the relationship between
the two based on which major business and market related decisions can be taken. In this report,
Tesco is taken as a retail business organization. It is headquartered in UK and ranks among the
top four retails giants in UK. This report provides an insight about the basic and important micro
economic concepts which includes fundamental concepts of demand and supply along with the
factors affecting it other than the price and also covers a comparison between the economic
theories of 21st century and 20th century and its association with the current organizational
practices.
TASK 1
1.1 Law of demand
The law of demand in economics states about the change in the quantity demanded of
goods and services on account of variation in the price assuming all other factors to remain
unchanged. It is the most fundamental principle of economics (Listokin, 2017). It means that as
the price of the product rises, the demand of the same falls and when price falls then the demand
increases. It basically depicts the consumers choice behaviour as and when the price changes.

The graph above shows that as the value or cost of the product rises to p2 from p3, then
the demand of the product drops from Q3 to Q2 and again to Q3 and vice-versa.
Movement along the demand curve
Under this, the quantity demanded variates in relation to the variation in the price of the
goods taking all other factors to remain same which is called as movement along the demand
curve (Gilroy and et.al, 2018). It can be either downward when there is “expansion in demand”
and upward movement when there is “contraction in demand”.