Contemporary Economic Analysis for Sainsbury plc

BM533 Contemporary
Economic Analysis

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Explanation of law of demand and factor effecting low of demand curve...........................3
1.2. Determination of Law of supply movement and changes in supply curve with influencing
factors..........................................................................................................................................6
Task 2...............................................................................................................................................9
Comparison and contrast of economic theories : .......................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In this report it describe about the variation which are presently experienced by the
SAINSBURY groceries store in its daily sales revenue and they find the best method to deal
with that problem. On the other side, firm hire a sales manager but it was also not aware
about the concept of microeconomics it mainly includes the shift in demand and supply of
the grocery store (Abanina and et.al., 2018). On that basis, company need to understand the
meaning of law of demand and changes in its demand curve along with this it also indicates
the components which create an impact on the demand curve of the organization. In other
step firm also need to understand the meaning of law of supply and the changes in supply
curve of the business along with the factors who influence the supply curve of the firm. In
the end company show the comparison and relation between two theories of business
practices.
TASK 1
1.1 Explanation of law of demand and factor effecting low of demand curve.
Microeconomic:
Microeconomic is a pert of science which refers to the scrutiny of individual consumer,
households and firm's activity in discovering and allocation of resources. Simply it deals in
micro concepts and the main focus of microeconomics is fulfilling needs and wants of
individuals. Example of microeconomic are consumer equilibrium, savings and incomes of
individuals.
Law of demand: law of demand refers to the inverse relationship between the demanded
price and the quantities for the products. Law of demand determine the needs consumers for
goods and services at a given price. If price of a commodity decrease then demand of same
commodity will increase whereas price of commodity increase, it will inversely impact on the
demand of the same commodity (Adams and Klobodu, 2019). Principles of law of demand are
taken into consideration to microeconomic and macroeconomic which states that if price of
commodity change, it will inversely influence the all the demand factors which are income, taste
and preference of consumer. Practically working of law of demand into the market explained
with the help of example below:

Sainsbury is a company which deals in the grocery products. Company already selling a product
for 20 dollar and the sale sale is constant as before. To increase the sell they decide to decrease
the price of the product to 15 dollar and as result of decrease in price sell of the product is
increased. It clearly determines that the price of a commodity increase then the demand of such
commodity will increase, it is because consumer buy more product when price of product
increase to save money. On the other hand if price of product is increase by the company to
maximise their profits, resulting demand of the product is decreased. It is because consumer can
shift to other company product which offer same product in lesser price. The taste and preference
of the consumer also change if price of a product is increase and decreased. Price factor majorly
influence the consumer decisions while purchasing a product or service. There is an exception
that the product having no competition in the market or no one in dealing in the same product
then the company can control the price of the products freely (Bucci, Prettner and Prskawetz,
2019). If the product is a necessary item for the consumers then price does not matter to them.
Sainsbury has to determine the price factor , market condition , consumer needs and their
purchase power while changing the prices. Company has to determine all factors which influence
the demands of a commodity to maximise their profits and growths.
Demand curve: It refers to the graphical representation of the relationship between price
and quantity of a demanded product. It drawn with demanded quantity on the horizontal axix and
price on the vertical axis of the graph (Chen and Zhong, 2021).
Factors affecting demand curve of Sainsbury plc: