Contemporary Economic Analysis: Law of Demand, Supply and Economic Theories

Contemporary
Economics
Table of Contents
INTRODUCTION ..........................................................................................................................2
MAIN BODY...................................................................................................................................2
1. Explaining Law of demand along with movement of demand curve and factors that effects
the demand curve........................................................................................................................2
2.Distinguishing between different economic theories from 20th and 21st century and their
application in the modern economics..........................................................................................8
CONCLUSION ...............................................................................................................................9

INTRODUCTION
Micro economics is a diversification of economics that examines the level of attitude of the
businesses, firms and households. It can also justifies that the decisions will be taken at very
small scale by examining the component of demand and supply. Unilever is a British multilevel
retail consumer company which generally deals in foods, ice-cream, beauty products and
personal care. It was founded in the year 1929. In this report, law of demand and law of supply
of the company Unilever and with the inclusion of diagrams to explain the law of curves while
using the market forces. (Arslan and Bashir, 2021)
MAIN BODY
1. Explaining Law of demand along with movement of demand curve and factors that effects the
demand curve
Law Of Demand
The law of demand shows that cost and the amount of the any product and services shifts
and all the other factors remain same which are oppositely in proportion to each other. When the
cost of a product increases the, the demand for the product will fall and when the cost of product
decreases the demand of the product will increase. Law of demand demonstrates the nature of the
consumers when the price of a product changes. In the market, prediction of the other
characteristic which affects the demand remains constant and the cost of a product rises
automatically which leads to the decrease in the demand of the product. It is a very common
human tendency. It occurs because the consumer is not ready to pay more for the product and
also having the fear of going out of cash.
Demand Curve for the Unilever products:
When the demand of the goods changes, the customer responds by decreasing the
purchasing power of a product. It occurs when all the other factors are different but the price and
quantity remains constant.(Chang and et.al., 2019)

Figure 1: Law of Demand Curve
The diagram which is shown above represents the demand of the curve which is a downward
sloping. Gradually, the cost of the product increases and the price p3 and p2, then the demanded
quantity comes down from Q3 to Q2 and the back to Q3 or vice-versa. This demand curve shows
that the negative relation between the price of the product and its quantity demanded. In this
demand curve Q2 is the initial quantity demanded and p2 is the initial price of the commodities.
If there is a increase in the quantity demanded from the Q2 to Q3 the price of the commodities
will decrease from p2 to p1. On the other hand, if there is a decrease in the quantity demanded
form Q2 to Q1 there will be a increase in the price from p2 to p3. This represents the inverse
relation between the two variables.
Changes in the factors of of demand curve:

The demand for the product only changes when the cost when the price of the factors are to kept
constant. Moreover, the change in these factors predicts the market demand of the product and it
also affects the position of the curve.
1. Taste and preferences– The needs of the consumers for particular goods can be
estimated by a pattern of the purchasing the goods. The most important cause for the
movement in the taste and preferences of the consumers of the Unilever is because of
change in demand of consumers(Ferber, Nelson and Eds., 2020). This also affected the
commercial ads which the sellers and the producers do for the different kinds of products.
It also has a positive impact on the consumers taste and the demand will increase and the
adverse effect can support to fall in the demand. This leads to movement of the demand
curve towards the right and left side.
2. Income – It is one of the most crucial element on which the demand of the goods of
Unilever are based. The power of purchasing of the customers is increased when there is
rise in the income. It shows that the consumers can effortlessly purchase the products at
the current market price. This can outcome in the rise of the requirements and will be the
main cause of the movement in the demand curve on the right side. On the other side, if
there is a fall in the income of the individuals than the purchasing power of the customers
will directly decrease and after that they can only afford the items which are the daily
essentials of the individuals.