Contemporary Business Economics: Law of Demand and Supply with Reference to Tesco Plc

CONTEMPORARY
BUSINESS ECONOMICS

Table of content
INTRODUCTION...........................................................................................................................2
TASK A...........................................................................................................................................2
1.1 Law of demand, movement along the same demand curve and change in demand curve
with reference to Tesco Plc..........................................................................................................2
1.2 Explain the law of Supply, movement along the same supply curve and changes in supply
curve with reference to Tesco Plc................................................................................................5
TASK B...........................................................................................................................................8
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...............8
REFERENCES..............................................................................................................................11
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INTRODUCTION
Contemporary business economics is a field which involves the study and analyses of the
organization structure, issues and its relationship with the labour, capital & product market in the
present time using the economic theories and quantitative methods (Cerreia-Vioglio and
Rustichini, 2021). This report will critically analyse the micro economic concepts such as law of
demand and law of supply with reference to Tesco Plc. Tesco is basically one of the third largest
retail company of UK which offers variety of general merchandised and groceries products to its
local and international customers. The company operates in more than 11 countries with around
7005 stores all around the world. This report will discuss the movement along demand and
supply curve with the shift in demand and supply of Tesco products. Lastly, the report will
compare and contrast the emerging theories and models in 21st century with that of 20th century
along with its relation to modern business practices.
TASK A
1.1 Law of demand, movement along the same demand curve and change in demand curve with
reference to Tesco Plc
Law of Demand: This is one of the most important and fundamental concepts in
economics which state that there is an inverse relationship between the quantity demanded and
price of the goods and services. It means an increase in the price of product leads to the decrease
in the quantity demanded or vice-versa (Fatimah, 2021). According to consumer preference
theory it is identified that consumer understand the combination of two goods which are
preferred according to price of the good with the account of budgetary constraints in the market.
For example, Oat milk is a product that is offered by both Tesco and its competitors. That
is why, the demand for Tesco’s product can be changed due to another firm so the curve is
shifted or change according to the situation. There are different types of demand curve such as,
competitors, inflation, population, season and climate etc are affect the demand and supply of the
product.
Movement in demand curve
The main factors that affect the demand curve is price of the commodity because there is
different commodity which has its own price but customer always to towards the price which is
low in the markets. Also, it is affected the quantity demanded and the other factors remain
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constant. The price of Tesco’s oat milk much higher than the Walmart’s oat milk that is why is
the demand curve is expanded and contracted.
 Expansion of the curve-
From the above diagram it has been analysed that when the price of the oat milk is shifted p to p1
it affects the quantity demanded with the help of increasing in the commodity of oat milk by
shifted q to q1. So, it is understanding that’s when price of Tesco’s product is decreases on other
hand the demand for the commodity will be increases. There is inverse relation between quantity
demanded and price of the commodity and all the other things will be equal. It is also known as
the downward movement of demand curve.
 Contraction of the curve- From the above diagram it has been analysed that when the
price of the oat milk is shifted p to p2 it affects the quantity demanded with the help of
increasing in the commodity of oat milk by shifted q to q2 (Gilroy, Koffarnus and
Hantula, 2018). So, it is understanding that’s when price of Tesco’s product is increases
on other hand the demand for the commodity will be decreases. There is inverse relation
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