Demand and Supply Analysis

DEMAND AND SUPPLY
ANALYSIS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
Law of Demand...........................................................................................................................3
Law of supply..............................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Demand and supply refers to quantity of goods the company wishes to sell at various
prices and for which its customers are willing to buy. Demand refers to how much of that item,
products or commodity consumers are willing and able to purchase at a given price whereas
supply pertains to how much company is willing to produce and can give it in market.
Morrison’s is fourth largest chain of supermarket in UK where it provides wide range of
products and service in food, electronics, home-wares and others. Present report will throw some
light on demand and supply which are fundamental to any business and helps in understanding
its impact on growth and success of company.
MAIN BODY
TASK 1
Law of Demand
This law related to various factors that are being constant in Morrison, quantity demanded
of commodity and price of goods and services are inversely related to each other which states
that when price of product of Morrsion increases it subsequently decreases the demand of its
product and vice- versa. This law explains choices of consumer behaviour in relation to changes
in price level of company products and services. It refers to other factors affecting demand to be
highly constant but when prices of goods and services rise it leads to fall in demand of company
goods and services. This is natural behaviour on side of consumers as they fear to spend more on
products and services and which left them out with doubt about the quality of same. It states that
quantity purchased inversely varies with price.
It is a fundamental principle of economics which states that at higher price of goods and
services of Morrison consumer will demand lower/ less quantity of products and services. It is
derived from law of diminishing marginal utility which states that consumer’s uses first unit of
products and services to satisfy their urgent needs first and uses additional units of products/
services to satisfy their lower value of needs (Mazurek, García, Rico, 2019.).

Figure 1; Demand Curve
Source-. Definition of 'Law of Demand', 2020
The above diagram states that it is downward slopping which states that as price increases
from p3 to p2 and p1 its quantity demanded decrease from Q3to Q2 and finally to Q1.
Movement along demand curve.
Movement along the demand curve occurs when the prices of good changes which in turn
changes the quantity demanded which is in accordance with original relationship with demand. A
shift in demand means consumer of Morrison are willing to buy more at same price (Franks,
Bryant, 2017). Change in prices cause movement along the demand curve where it can be either of
the two extension and expansion that generates more demand or contraction which relates to less
demand.