Contemporary Business Economics

Contemporary Business Economics
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
1. Explain law of demand along with demand curve and the factors which affect the demand
of Products...................................................................................................................................3
2. Explain law of supply along with supply curve and the factors which affect the supply of
goods & services..........................................................................................................................6
TASK 2............................................................................................................................................9
1. Compare and contrast the 20th and 21st century contemporary economics..............................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Contemporary Business Economics is a working environment with a huge competitive
marketplace that continues to evolve at a very rapid rate and the owner of such a company must
be able to consider the criteria and changes that will need to be made in company in order to
respond quickly (Ito and Sallee, 2018). It is also referred to as managerial economics where
application of economic theory and business methodology will be done for better decision. For
the better understanding of this concept, Sainsbury’s company selected which is UK’s chain of
supermarket. It is founded by John James Sainsbury in 1869, around 151 years ago. This
assessment covers several topics such as law of demand and supply and the factors which affect
the curves and force them to shift to left or right side. In addition, compare and contrast the 20th
or 21st contemporary economic theory and related with the modern business practices.
MAIN BODY
TASK 1
1. Explain law of demand along with demand curve and the factors which affect the demand of
Products
The law of demand claims that when certain variables are constant, the quantity required
for a good demonstrates opposite relation to the price of a commodity. This means that, as prices
rise, demand is declining (MUNRO, 2019). It is a graphical representation which shows negative
relationship among price and quantity demanded. In relation of Sainsbury’s, when price of its
goods will decline as the law of demand suggests, the demand of its products rises. Product
development department of company will set the prices where optimum competition and
increased income can be achieved.
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Figure 1.Law of Demand, 2020.
The above mention graph shows the relationship between the quantity and price of the
commodity. The X axis represents the total quantity while Y axis indicates the price at which the
product is requested. The diagram above showcases when the price to be fixed at p1 than total
demand for a commodity is q1 and when the price of a product is reduced to p2 the quantity to be
claimed is increased to q2. It means when company reduces the price the goods, it will increase
the demanded quantity and vice versa. If Sainsbury’s reduces the price of its brands, the demand
for its product lines will boost immediately.
Factors which affect the demand and force to shift demand curve:
There are several factors which affect the demand as well as demand curve. In short run
all the factors are constant rather than price but in long run every factor affect the demand of
consumers. These are discussed below:
Taste & preference: When a product or service enters into fashion, the curve of demand
moves to the right. In comparison as a new pattern arises, the market curve moves to the left and
the product or service goes out of style once again. This factor affects the demand curve and
forces them to shift right or left side.
Disposable income: The spending power of a person who asks for a commodity is one of
the most significant variables that directly affects demand and may allow more directly having
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