Contemporary Business Economics

CONTEMPORARY
BUSINESS ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Law of Demand...........................................................................................................................3
Law of supply..............................................................................................................................5
Task 2...............................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The study is on microeconomic concepts and theories of contemporary economics. The law of
demand, movement across the curve plus change in the curve have been described. The law of
supply, movement across the curve and change in the curve have been illustrated. Marks and
Spencer is the organisation taken for the study. It is a retail enterprise in UK dealing in
diversified product range of merchandise. The study compares theories of economics of 20th and
21st century and which relate them to practices of business.
Task 1
Law of Demand
The law of demand says that factors being constant, price and demanded quantity of good and
service and goods are related in inverse proportion with each other. As the product price rises,
product’s demand will fall. The law of demand gives explanation about consumer choice
behaviour when price change. Consumers buy less of a product if they find the price increasing
and thus demand for good subsides. This is the natural behaviour of consumer choice (Salerno,
2020). It happens as consumer sees that the product can be done without if it is expensive and
not necessary for buying. This can also be said to be a case of marginal utility being diminished.
People utilise the first units of a good for serving necessities first and then utilize every
additional unit of the product for serving lower valued ends. Marks and Spencer have a product
range which cater to middle class segment and thus they follow the law of demand in pricing
those certain categories.

Movement along demand curve
The diagram shows the movement along demand curve. When the commodity’s price increase
from price P3 to P2, then the demanded quantity declines from Q3 to Q2 and then to Q3 and
again goes round.
The demand curve tells the total of demanded quantity at every price along the consumers in
market. The change in price is seen in the demand curve’s movement, however not by self
increasing or decreasing demand (Salerno, 2020). Magnitude and shape of demand changes in
answer to change of preferences of consumer, income and relating to economic commodities but
not to price change.
Change in demand curve
In economics, it becomes necessary for knowing the difference of concept of quantity and
demand which is demanded. Demand shows relation between requirement of wants of consumer
and units in number of economical goods. Demand change means change in position or curve’s
shape, which shows a shift in the graph of consumers’ wants plus needs talking of means
available.