Exploring the Law of Demand and Supply in Contemporary Business Economics

This essay explores the concepts of the law of demand and supply in contemporary business economics. It explains the relationship between price and quantity demanded, movement along the same demand curve, and changes in the demand curve with its factors. The essay also discusses the law of supply, movement along the same supply curve, and changes in the supply curve with its factors. Additionally, it compares and contrasts emerging theories and models in 21st-century contemporary economics with those of the 20th century and relates them to modern business practices.

Contemporary Business
Economics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Explain the law of Demand, movement along the same demand curve and changes in
demand curve with its factors......................................................................................................4
1.2 Explain the law of Supply, movement along the same supply curve and changes in supply
curve with its factors....................................................................................................................7
TASK 2..........................................................................................................................................10
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..............10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Through behavioral economics, scholar has successfully challenged the traditional notion that
economic behavior of people is bound by logic and theories. Through his research, he established
that people's own perceptions, their beliefs about morality, their own needs, facilities, etc. have a
major impact on their economic decisions. Two of the biggest subdivisions of the study of
microeconomics and macroeconomics economics refers to the "big picture" version of which
refers to the observation of small economic units like the effect of micro-market and consumer
decision-making and government regulations on macro. Refers to how interest rates are
determined and that is why the economy of some countries Systems grow faster than others'
economics.
This report incorporates two tasks; 1 and 2. In the principal work; the idea of the law of interest
and supply is clarified with regards to Wal-Mart retail exchange; with the assistance of outline.
In task 2 comparisons of hypotheses of both the contemporary and the cutting edge strategic
approaches in the 21st and twentieth hundreds of years.

TASK 1
1.1 Explain the law of Demand, movement along the same demand curve and
changes in demand curve with its factors
Law of Demand: While other things remain constant, the demand for a service or item increases,
and its demand decrease. When there is a shortage, its demand increases. Therefore, the law of
demand states the opposite relationship between price and quantity demanded. Samuelsson
preferred to call the law of demand, the rule of demand bending down. The type has been
defined as, when the price of a commodity is increased, it is less sought for that article. In other
words, if producers decide to supply more quantity of goods today than yesterday, if other things
remain the same, this greater quantity of goods can be sold at a lower price than yesterday's price
(Stoneman and Bartoloni, 2018).
If other factors influencing demand remain constant, then the inverse between the demand for a
commodity and its price. There is a relationship; a lower quantity of the commodity is purchased
at a higher price and a higher quantity of the commodity at a lower price is purchased.
Movement along the same demand curve:
When the quantity required for a commodity changes due to a change in its price, keeping the
other factors constant, it is known as a change in the quantity requested. It is expressed
graphically as a movement along the same demand curve. Here may be a downward movement
(expansion of demand) or an upward movement (contraction of demand) along the same demand
curve (Fennell and Foster, 2019).
I. Demand expansion is indicated by downward movement from L to N. Required quantity rises
from OQ to OQ1, Due to the price drop from OP to OP1,
II. The contraction in demand is indicated by an upward movement from L to M. The requested
quantity drops from OQ to OQ2 due to the price increase from OP to OP2

Upward movement:
When the price raises to OP2, the requested quantity drops to OQ2 (known as a contraction in
demand) leading to an upward movement from L to M along the same demand curve DD. The
contraction in demand refers to a decrease in the quantity demand due to an increase in the price
of the goods, other factors remain constant.
Downward movement:
On the other hand, the drop in price from OP to OP1 leads to an increase in the quantity required
from OQ to OQ1 (known as expansion of demand), resulting in a downward movement from L
to N along the same curve. It is also referred as the expansion of demand where an increase in
the quantity demands due to a drop in the price of the goods, other factors remain constant.
Changes in demand curve with its factors:
This situation also known as shift in demand curve; under such condition, changes in quantity
demand occur due to factors other than price. Here, demand is not affect by any change in
product price or price is taken as constant factor.
Below is the discussion of changes in demand with the context of its factors:

Since we additionally recognized factors other than value that influence interest for a thing, it has
been useful to consider how they identify with our variety of the interest bend:
Pay: An expansion in salary would be an interest change for a typical useful for a second rate
great and a privilege to one side. On the other hand, a reduction in pay would be an interest move
to one side for a typical decent and a privilege to a second rate great.
Related Material Prices: The cost of a choice will increment, as the interest movements to one
side, the cost of an enhancement will diminish. Then again, a cost abatement of an alternative
will build the cost of an enhancement as request movements to one side.
Taste: An expansion in taste for an item will be an interest change to one side, and a lessening in
taste for an item will be an interest change to one side.
Desires: An adjustment in desires expands that the interest bend will change to address the
present interest, and that the interest bend changes to one side of the present interest diminishes,
an adjustment in desires (Curtis Jr, 2018).
Number of Buyers: An expansion in the quantity of purchasers in a market would be a market
request change to one side, and abatement in the quantity of purchasers in a market would be a
market request change to one side.

1.2 Explain the law of Supply, movement along the same supply curve and
changes in supply curve with its factors
Law of Supply: There is a direct relation between the price of a commodity and its supply, that
is, under normal circumstances, the supply of the object increases when the value of the item
increases and the law of supply of the item when the price decreases. If other things remain the
same, if the price of a commodity increases, then the quantity of that item will also increase and
if the price is low then the quantity will also decrease. Individual supply is the supply of a firm
while market supply is the supply of all firms in the market. The supply schedule is the table that
shows the quantity of the supply of the item at different prices in a given time, while the supply
curve shows the relationship between the price and the supply diagram (Nechyba, 2019).
In a market there are many sellers who are ready to sell the item at different prices. If the supply
of all these vendors is added then a market supply table will be created. When the supply table is
expressed graphically, it is called the supply cycle. The supply curve thus explains the
'relationship' found between the quantities available for sale of a commodity at different prices.
Like the supply table, there are two types of supply curve - (i) individual supply curve and (ii)
market supply curve.
Movement along the same supply curve
The price of the elements that affect supply is of paramount importance. When other things
remain the same and only the price changes, then the quantity of supply means change or
expansion (Chauhan, 2016).

When there is no expansion and narrowing in supply, the trend of the goods seller is the same
supply curve. A downward shifting in the supply curve of the seller, when the price increases
indicates a contraction in supply. In short, as the price increases, the producer presents a quantity
of maximum supply, which is called contraction of supply (Besanko and Braeutigam, 2020).
Changes in supply curve with its factors
The fulfillment of each object depends on many elements. When the supply curve changes due to
a change in any other element affecting the supply when the price is stable, it is called a change
in supply. For example, among the factors affecting supply, changes in the technique of
production, changes in the price of the means of origin, changes in the income of the vendors,
changes in the objective of the new inventors, etc. Changes in the supply of an object due to
changes in any one of these components are in two ways - (1) Increase in supply. (2) Reduction
in supply (Cowell, 2018).
Factors affecting supply of goods:
Other factors that affect supply do not change. In this section we will study how other factors
affect the supply of the object. We will now recognize that the price of a commodity does not
change. Apart from the price of the commodity, other factors that affect its supply are:
Prices of other goods: When the prices of other goods rise. So the firm will invest its resources in
the production of goods whose prices have increased. In this way the supply of these items will

increase, although their prices have not increased. Therefore, supply of goods may change at a
given price due to changes in prices of other goods (Kreps, 2019).
Prices of means of production: If the prices of the means of production used in the production of
a commodity increase and the price of that commodity remains the same, then the producers will
get less profit.
Producer's purpose: The aim of the producer is generally to earn maximum profit. Therefore, he
produces only that much of which he gets maximum benefit. But it is also possible that the aim
of the producer is to make maximum sale of the commodity instead of getting maximum profit.
In such a situation, he sets a target of the amount of profit in front of him and the fulfillment of
the object is increased until its target of profit is adversely affected. Thus the purpose of the
producer also affects the supply of the commodity.
Production technology: The development of technology does not mean the development of
machines or new methods of production. This type of development reduces the cost of
production and increases the profit. Hence the producer can increase the supply of the goods at
the same price. Thus, improvement in production technology also affects the supply of goods.
All of the above factors affect the supply of the item (Mankiw, 2020).

TASK 2
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
Economic development:
A growing body of research is emerging among late 20th century development economists
focusing on the interactions between ethnic diversity and economic development, particularly at
the nation-state level. While most research looks at empirical economics at both macro and
micro level, this field of study has a particularly heavy sociological approach. The more
conservative branch of research focuses on testing for causality in relationships between different
levels of ethnic diversity and economic performance, while a smaller and more radical branch
argues for the role of neoliberal economics in improving or causing ethnic conflict. In addition,
by comparing these two theoretical approaches it brings the issue of endogeneity in question.
This remains a highly controversial and uncertain sector of research, as well as politically
sensitive, largely due to its possible political implications (Wilkinson and Klaes, 2017).
The main points of disagreement in the debate on the macro economics theory are four. A
consensus has not yet been reached on these points and, consequently, remains the subject of
research. We list them below:
(i) Interpretation of the labor market: During the economic cycle the unemployment rate
undergoes wide fluctuations. Proponents of the real business cycle theory say that fluctuations in
employment are the result of changes in the number of individuals who want to work: by
hypothesis, the economy is always on the curve of job offer. These scholars are convinced that
unemployment statistics are difficult to interpret for at least two reasons: individuals can declare
themselves unemployed to qualify for unemployment benefit; and the unemployed might be
willing to work if they were offered the wages they received in previously.
(ii) The importance of technological shocks: Proponents of the real business cycle theory
assume that the ability of economic systems to produce goods and services, given the inputs of

capital and labor, varying over time. These variations are caused by the climate, by the laws a
protection of the environment, the prices of oil products and technology.
(iii) The neutrality of money: The contractions of monetary growth and inflation are generally
associated with periods of high unemployment. Most of the observer interprets this phenomenon
as evidence of the strong influence of politics monetary policy on the real economy. The real
business cycle theory emphasizes non-monetary (therefore "real") causes of economic
fluctuations, stating that the close correlation between money and aggregate product is due to the
fact that fluctuations in the aggregate product causes fluctuations in the money supply, not the
other way around. So proponents of the real business cycle theory say that monetary policy does
not affect real variables such as employment and income (Sunstein, 2017).
(iv) Flexibility in prices and wages: Most microeconomic analyzes speculate that prices adjust
so as to balance supply and demand. The supporters of the 151 real business cycle theory believe
that even in macroeconomics it should be done apply the same hypothesis, and that the stickiness
of prices and wages is not relevant for the purpose understanding of economic fluctuations.
Critics of that theory, however, do note that many wages and prices are rigid and say they are
convinced that this is rigidity explain both the existence of unemployment and the "non-
neutrality" of money.
Behavioral economics:
Through behavioral economics, Theiler has successfully challenged the traditional notion that
economic behavior of people is bound by logic and theories. Through his research, he established
that people's own perceptions, their beliefs about morality, their own needs, facilities, etc. have a
major impact on their economic decisions. He told in his research that people get away from the
logical situation in a similar way, in such a way that their behavior can be found out. He tried to
illustrate this by an example. According to the accepted principles of economics, in the event of
lower prices of petrol, the consumer will buy only the essential goods from the remaining
money. The reality is that even in this condition, he will spend the remaining money on petrol
only. He proved that people usually spend more for what they already have. He called it the
"endowment effect" (Hanoch, Barnes and Rice, 2017).

Actually Thaler has tried to bridge the gap between economics and psychology. Theler's research
examines how psychological and social factors influence decisions made by an individual,
individuals, or groups on financial issues. Theler's research has served as a bridge between
economic and psychological analysis in the decision making process. In examining the
consequences of limited rationality, social priorities, and lack of self control, he has shown how
these human qualities affect individual decisions and market outcomes (Dhami, 2016).

CONCLUSION
On the basis of above analysis, it can be concluded that; on the contrary, if the climate undergoes
permanent improvement, there is no inter temporal replacement effect for Crusoe's work: his
productivity today is identical to that of tomorrow. However, there are other reasons that could
push Crusoe to change his own work habits in a world characterized by a constantly more
favorable climate. There is an income effect, because Crusoe, thanks to the good weather,
becomes rich faster and therefore can work less. The income effect is partially offset by the
replacement effect, which acts in the opposite direction: since the price of free time in terms of
non-production is higher. The debate on macroeconomics give the way to change old method of
assumption and fresh studies should be carried out.

REFERENCES
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Instruction of Microeconomics Courses. Scholars' Press.
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Fennell, M.A. and Foster, I.R., 2019. Revisiting the Role of a Basic Math Assessment in
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Sunstein, C.R., 2017. Human Agency and Behavioral Economics: Nudging Fast and Slow.
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