Understanding Business Economics and Supply Demand

This report discusses the concept of business economics, which includes factors such as deficiency, product factors, distribution, and consumption. The manager of a company analyzes the demand and supply for a specific product to make meaningful decisions in terms of price, product, and supply of goods. Changes in supply and demand curves have a direct impact on prices, with favorable economies leading to increased income and greater demand, while increased supply reduces prices.

Economic for Business
Demand and Supply

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Supply and demand analysis to determine the factor in ascertaining price of Polo Mint in UK.
......................................................................................................................................................1
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the real world, the concept of business economics is the field of applied economics that
includes market related, economical, environmental, financial problems and their solution by an
organisation (Assous, Bruno and Legrand, 2014). The basic two elements in economy for
business is demand and supply that support in proper running and attaining suitable profit for
company. Supply basically means the total availability of goods in market offered by producer
and on the other side demand is the actual needs of goods by customer to fulfil their needs. The
overall interest of seller and purchaser support in identifying entire demand and supply for
various product at decent prices.
In this report, polo mint is selected and the main focus of report is on elements that leads
to modification in supply and demand and influence on price are discussed in this report.
MAIN BODY
Supply and demand analysis to determine the factor in ascertaining price of Polo Mint in UK.
In economies, the most important fundamental concepts that are known as backbone for
economy are supply and demands. In general term, demand is defined as the total quantity of
specific goods produced by companies which are needed by customer on a specific rate. Thus it
is stated that price and quantity demanded are help to reflect the demand relationship. On the
other side supply of good means the total quantity of goods offered by companies for sale at
specific time in particular market. In simple term, the good supplied by a producer is the
willingness of them to earn a specific price in certain time frame. Economic is defined as the
process of analysing production, consumption and distribution of goods and services that help to
raise the living standard of people. It is very curial for a manager of companies to analyse the
current changes and trends in economy so accurate decision are made to meet the demand and
supply of specific goods (Zervas, Proserpio and Byers, 2017).
Demand is the rate at which customer are desire to buy a good. It mainly holds two
significant factors such as ability that is related to buy a good at decent rate and taste to consume
means desire for a product. When prices are lowered, demand are higher and if price are very
higher for a good than demand will decrease because customer will to buy product but their
ability are limited to acquire specific goods. The below Figure display a generalized relationship
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between the price of a good and the quantity which consumers are willing to purchase in a given
time period.
Supply is defined as the ability and willingness of a manufacture to supply produced
goods that help to ascertain seller actions. It is observed that at higher price supplier provide
more quantity of product to buyer. This support them to maintain a decent profit above their
overall cost of production that further helpful in expanding business in short time frame. In case
when stock level in lower than the the actual needed stock than producer use to raise supply and
price for their product (Azevedo and Leshno, 2016). Therefore in short time sudden increment in
supply increase the cost of production that further increase the overall price for customer. The
below mention curve shows upward movement in supply curve because for producing each
additional unit of output require more cost that directly increase price.
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From the above graph, the consumer behaviours has been analysed which means the total
price consumer are agreed or desire to purchase particular good. On the other side supply curve
shows the overall behaviour of producer which means total price producer is willing to receive
by selling product in market (Bohi, 2013). For example, actual demand of Mint bars in market is
65 piece and supply are equivalent to actual demand than there are able to generate equal profit.
After increase in price of bar by 7 lbs than there must be decrease in quantity demanded as
customer have to spent more in order to buy mint bar. This increase in price will reduce the
profitability of business and polo Mint have to make other strategics to sell their product. In Polo
mint, company use to produce various product, so it is the responsibilities of manager to properly
analyse the market trends and changes in economy that could impact the production and supply
process. The market is basically divided into two segments: the one is related with factor market
where different goods are purchased and sold. Whereas the other one is related goods market that
is mainly connected with the actual production of specific goods.
In general economic term, the points where prices of product are able to create accurate
and exact demand and supply of these product is known as equilibrium point. It help an
organisation to raise profit and increase production level that improve the overall economy level
(Wang and et. al., 2016). Thus manager of Polo mint through help of equilibrium point are able
to develop effective policies, future plans so that upcoming goals are achieved and profit can be
maximised. To better understand the importance of this point is being mention and discussed that
benefit to examine the total demand and supply:
The above graph, shows that there is a slight movement in point from E towards E1. This
shift happen because of emergent changes in demand for a quantity by 20pcs and the demand
curve move from D in right direction towards D1 this is because the price of product are same
and there is equilibrium point. The graph also shows that when price of product shift from So it
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is further observed that the law of supply and demand in the context of Polo mint are supportable
in order to find out the total resources acquired to meet the production requirement. The supply
and demand curve generally shows the market equilibrium and the crossways of these curves
help to figure out the points at which quantity of company goods that are supplied within
marketplace are closely equivalent to overall quantity demanded by consumer. In this respect,
some alteration in pricing of goods would leads to make variation among demanded and supplied
quantities whether the result are favourable for polo mint or they have to make better changes..
For example, fixing a faithful price of Mint bars higher than market equilibrium intent to cut
down the actual demanded quantity and Polo mint will more focus to increase the supplied
quantity. In this situation either there will be extra supply or company faces the situation of
losses (Heakal, 2015).
In it illustrated that any movement in the supply or demand curve will have major impact
on equilibrium price such as decrease in demand will reduce the price of equilibrium and vice
versa. So by analysing the market economic, the main role of managerial is to consider different
factors that effect the overall activity of company. Some factors are governance involvement,
taxes, interest rate, customer expectation, technologies that impact the demand and supply of
particular product of Polo Mint.
The above graph shows that there are changes in demand of product are depended on
customer income. Such as in case if income of customer raises than they will buy more of Mint
bar and vice verse. In context of movement in demand curve towards right would support to
grow the need of single product in market (Kaiser, 2016). Likewise, demand for Polo Mint
product intent to diminish in case if demand curve move in left direction. There are many more
cause due to which demand curve move from left or right. It could be better explained with the
help of following figure:
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From the above graph, it is known that due to various causes there is a slight increases in
demand curve for several goods of Polo Mint (Kakarot-Handtke, 2014). These elements are
improvement in taste, willingness of clients to acquire goods at specific price, emergence of
substitute goods, rise in price of alternative goods, anticipate of consumer so they promote more
buying are important factors that will shift demand curve to right direction. Likewise, there are
different variables would lead to move curve in left direction such as reduction in demand of
primary product, changes in taste shift due to less popularity of company goods, more dependent
on substitutes goods, reduction in customer income level etc. These all factors have major
outcome on price and demand of products manufacture by Polo Mint in negative manner that
will also impact profitability of overall business as well.
In respect to supply there are also different forces due to which supply of product are
impacted. Such as if prices of specific goods are are less and demand are higher than supplier
make a smarter move to cut down the supply of those product within market. The supply law
chiefly discuss that, more the price of specific good supplier are more focused to generate more
profit by supplying larger amount of these product in particular market. Such as marketing price
for Mint Bar in UK raises due to more and more demand form large number of customer
(Vivchar, 2016). Then supplier of company plays a crucial role by maximising supply at
favourable price so they are able to generate more profit and attain the future goals. It primarily
display that amount offered by firms are assorted that depends on the several price levels. The
relation among price supply and price shows an upward movement which emphasis that there are
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positive connection between them. But there are various factors due to which supply for polo
mint product can be affected. This could be better understand with the support of following
figures:
Illustration 1: Demand Curve. 2019
The above graph shows, there are some key elements due to which there is increase in
supply of Polo Mint goods such as natural conditions for producing goods, decrease in prices of
raw materials, better technologies and less interaction of government. Due to all these factors
there is a slight movement in supply curve in right direction as company will supply more goods
in market. In Polo Mint, total addition in supply will help to modify the pricing strategies so that
they could offer the same goods on less price. It may increase demand of respective products
also that helps in reducing demand of substitutes. Similarly there are some major factor due to
which supply of company product will reduce and customer would look for other option such as
taxes rate, non availability of resources, regulations and rules on trade, increase price of cost of
materials, results in decreasing supply as well.
Henceforth, it has been determined that various forces have major influence on the supply
and demand of Polo Mint product as well as strategics relevant to price. Therefore, alteration in
supply and demand would influence on the price of Polo Mint product either in negatively or
positive manner. That could be explained with the support of below example:
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The figure shows that when there is equilibrium situation in market then prices of product
will remain equal which means the demand of Mint bars are equal to the supply. In case if there
are few alteration in supply of goods or demand of polo product than it have impact on the
equilibrium quantity and price. This is discussed underneath:
Shift in demand curve
(when supply is unchanged)
To the left Indicate a diminishing in
demand
Help to reduce equilibrium
price
To the right Shows an increase in overall
demand of goods.
Support in increase in
equilibrium quantity
Shift in supply curve
(when demand is unchanged)
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To the left Display a reduction in supply
of goods
Due to this equilibrium or
price decrease
To the right Indicates actual increase in
supply
It will happen to increase in
equilibrium quantity.
The above table shows that with the addition in demand of goods have impact on
equilibrium price that must raise by a decent ratio (Storey, 2016). On the other side alteration in
same would lead to reduce the prices price in significant manner. Apart this, movement and
changes in supply curve helps to analyses that there is overall increase to the supply of Polo Mint
product and further leads to reduce the price and thus further help to rise in equilibrium. For
example, in case if total income for household improve then demand for companies product
would also shows a rise as purchasing power of customer will increased. Due to this rise there
would be a shift in demand curve from left to right direction and overall price of Mint bar also
boost. Similarly, if family income reduces then process then there would be reduction in
consumption of Polo Mint product and there is a movement in demand curve from right to left
direction. It will leads reduces the demand as well as price of goods produced by company in
negative manner and also effect on profitability of Polo mint. From the above figure, it has
measured that price of Polo Mint will remain unchanged if both supply and demand increases
simultaneously. Under this condition, equilibrium state will also not deflect if demand and
supply curve both changes in positive manner (Täuscher and Laudien, 2018).
CONCLUSION
The above report discussed that business economics include subordinate like the concept
of deficiency, product factors, distribution and consumption. Manager of company analyses the
demand and supply for specific product and make meaningful decision in context of price,
product and supply of goods. It is also concluded that changes in supply and demand curve have
direct impact on the prices of goods offered by companies. In case if economy is favourable then
customer have greater income and they demand more goods to fulfil their requirement. It directly
increase the prices of product and similarly in case of more supply of particular good will
reduces the prices. With the support of demand and supply curve Polo Mint are able to determine
the equilibrium point so that profit and loss can be calculated.
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REFERENCES
Books and Journals
Assous, M., Bruno, O. and Legrand, M. D. P., 2014. The law of diminishing elasticity of demand
in Harrod's trade cycle. Cahiers d'économie politique/Papers in Political Economy. (2).
pp.159-173.
Azevedo, E. M. and Leshno, J. D., 2016. A supply and demand framework for two-sided
matching markets. Journal of Political Economy. 124(5). pp.1235-1268.
Bohi, D. R., 2013. Analyzing demand behavior: a study of energy elasticities. RFF Press.
Heakal, R., 2015. Economics basics: Supply and demand. Investopedia. accessed September. 28.
Kaiser, H. M., 2016. An economic analysis of the Cattlemen’s Beef Promotion and Research
Board demand-enhancing programmes. Applied Economics. 48(4). pp.312-320.
Kakarot-Handtke, E., 2014. The Law of Supply and Demand: Here it is Finally.Available at
SSRN 2481840.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Täuscher, K. and Laudien, S. M., 2018. Understanding platform business models: A mixed
methods study of marketplaces. European Management Journal. 36(3). pp.319-329.
Vivchar, O. І., 2016. Management system interpreting financial and economic security business
in economic processes. International Electronic Journal of Mathematics Education.
11(4). pp.947-959.
Wang, G. and et. al., 2016. Big data analytics in logistics and supply chain management: Certain
investigations for research and applications. International Journal of Production
Economics. 176. pp.98-110.
Zervas, G., Proserpio, D. and Byers, J. W., 2017. The rise of the sharing economy: Estimating
the impact of Airbnb on the hotel industry. Journal of marketing research. 54(5).
pp.687-705.
Online
Demand Curve. 2019. [Online]. Available through:
<https://www.khanacademy.org/economics-finance-domain/microeconomics/supply-
demand-equilibrium/demand-curve-tutorial/a/what-factors-change-demand>
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