Economic For Business

This report analyzes the concepts of supply and demand in economics, using Polo Mints as a case study. It explores the relationship between supply, demand, and price, analyzes factors that influence changes in supply and demand, and discusses the impact of these changes on the price of Polo Mints. The report includes diagrams to illustrate key concepts and provides a comprehensive analysis of the market dynamics.

Economic For
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body.......................................................................................................................................1
1. Supply & demand diagrams with the relationship among supply, demand & price...............1
2. What equilibrium is using a supply & demand diagram.........................................................2
3. Explain what leads to a change in demand.............................................................................3
4. Explain what leads to changes in supply.................................................................................4
5. Impact the changes in supply & demand will have on price...................................................6
6.Supply and demand diagram to illustrate the impact of changes in supply and demand upon
price.............................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Supply and demand in economics, shows the relationship between quantity of goods that
producers are wished to sell, on different price rates as well as quantity that customers want to
buy. Therefore, both terms are considered as two main important terms in economy,which gives
opportunities to marketers to understanding the current situation and operational flow of a
particular marketplace. This relationship also shows the development of a market on the basis of
exchange of commodities between producers and buyers are done. This project is going to
evaluate the overall supply and demand of a particular commodity at different prices level. This
would help in analysing how market operations leads to increase economical activities. To
analyse the impact of different factors on supply and demand, Polo mint is undertaken which is
one of the famous brand of Nestle. This peppermint is first time introduced in UK in 1948,
including a tag line as “Mint with a Hole”. Under this assignment, primarily focus is given to
evaluate how demand and supply affect price of this Polo Mints at different marketplace.
Main Body
1. Supply & demand diagrams with the relationship among supply, demand & price
Supply can be defined as the amount of a product that offers in a particular market place
whereas, demand shows the amount of the same that customers willing to purchase at certain rate
of price. Thus, both terms are considered as a backbone or most important concepts of
economical study, in fundamental manner. Here, price is derived through interaction of supply
and demand where exchange of goods or services occur when both buyers and sellers are agreed
on a specific price rate. In this regard, when such type of transaction or exchange of commodities
occurs then the agreed price is known as 'equilibrium price'. Here, both sellers and purchasers
show their willingness to exchange an amount of commodity at fixed price rates. In context with
Polo Mint, equilibrium price of this product may fluctuate with shift in demand or supply curve.
It can be illustrated by considering the following figure. Here, intersection of both curves reflects
on which point, quantity of a good supply to an area of marketplace is equal to quantity of
buyer's demand. Therefore, any changes in this point of inflexion will create different in price of
Polo Mint also (Piergiovanni and Santarelli, 2012).
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2. What equilibrium is using a supply & demand diagram
Equilibrium is the point in which supply contemporaries for a product, with the
equilibrium price existing where the hypothetical supply & the demand curves intersect to each
other (Rogerson and Rogerson, 2012). The demand of products are same as per the supply of
products in the market and it is good situation for the companies and provide help to earn more
revenue. With the help of diagram interface of two points can be shown for the Polo mints:
As the diagram reflects the relationship among price, demand and supply in context to the
Polo mints. In this case organisation can maximize the prices so that supply can be increase and
it affect the demand and it will also increase. While making comparison it is helpful and can be
affected while price highly changes. As per the diagram while price of products has maximize
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than demand is also increase and it reflect comparison for both that comes under equilibrium
identification.
3. Explain what leads to a change in demand
In toady's context demand basically changes due to price and secondly demand changes
on account changes in other factors. When demand changes as in change in corresponding price
that is said to change in quantity demanded. Moreover, a fall in demand leads to downshift of
demand curve to shift upwards. Herein, there are six factors that lead to change in demand of
polo mint are determined below:
Taste and preferences of consumer: In this factor taste includes fashion, habit, custom
and buying pattern of an individual. A good for consumer taste and preferences are greater claim
higher demand as in such situation demand curve lies at higher level. Herein, if the change in
consumer's taste and preferences of a particular commodity increases than demand of
commodity starts to decline. Such as in case of polo mint, if the taste goes up to the amount than
demand becomes higher even at high price. If the taste and preferences of an individual changes
or a product of demand is no longer in the market then demand of such product decreases.
Income of the people: In this factor demand of goods depend upon the income of
people. As there is direct relation between income and demand of commodities. Additionally, a
rise in income gives rise to a greater purchasing power as increase in demand have positive
power in competitive market place. Such as in case of polo mint, rise and fall in price depends
upon the income of an individual. As rises and fall in income the demand curve shifts upwards
and downwards respectively (Maglio and Spohrer, 2013).
Change in price of related goods: In such case demand for commodity is affected by
changes in the price of related goods of commodities. This can be substitute or complementary
goods. Herein a commodity is said to be substitute only when it yields the same utility and
providing satisfaction in the existing product where as complementary goods are jointly demand
as they are consumed untidily for satisfaction. Herein, in case of polo mint are tic tac its
substitute. If the price of substitute goods falls than the demand for that goods decline and when
the price of substitute goods raises demand for that good will increased.
Future expectation: Present demand consist of commodity that usually depends on
future expectation of change in price. In this case if people expect that price of a commodity will
rise in future. Herein, in case of polo mint if an individual have positive impact towards the
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product that will have high price so as to escape further rise in future price. Eventually, if there
is fall in polo mint price than demand for a particular commodity will be expected to fall in price.
Thus, if polo mint expects to raise in price in future than they may increase the present demand.
Population: Rise in population also gives rise to demand for necessaries of life. Herein,
composition and size of population affect demand. Herein, case of polo mint the rise of demand
of its product will shape the demand accordingly. For example :with the high birth rate demand
for milk and food increases on constant rate (Kose and Prasad, 2012).
Income distribution: Income distribution in the society it affects the demand of goods
and services. Such as in case of demand of polo mint, if distribution of income high than demand
good is also high. Thus, on the other hand if the distribution of income is unequal than the
demand for consumer's polo mint will be comparatively less in nature.
From the above discussion it has been determined that demands 6 factors play's an essential role
in meeting up the need and requirements of consumer in competitive marketplace. As it has been
said high the demand high the price, where as decrease in demand leads to decrease in prices.
Thus, in toady's context demand and price are important in achieving success in competitive
marketplace.
4. Explain what leads to changes in supply
The supply in the market can be change from the different reasons and some of these
reasons can be describe below:
Monopoly in the market: Monopoly is that situation where there is one seller in the market
but there are various buyers in the market as a result supply can be change. As the company
enjoys the situation of monopoly because it is very famous dealers of peppermint which provide
quality products to the persons. To lead in the market, it is important for the organization to
satisfy the needs and desires of consumers by providing quality products and it help the
corporation to enhance the profitability which is required for the growth of business.
Natural disaster: The activities of nature are uncertain which cannot be controlled and it
involves earthquake, flood and other natural calamities can impact the supply of Polo Mints. For
the management it is important to handle these situation effectively so that its negative impact
can be minimize in order to enhance the profitability (Hall and Lawson, 2014).
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Too much price: In some situations, organisations have to maximize the supply of its
products but demand & supply can be influenced with a minor mistake as a result interest of
consumers can be reduce and they does not buy the products at more price. It is important for the
management of Polo Mints to make effective policies for prices which does not impact the
supply of products and helps the company to maximize the sales as well as prices.
Fiscal policy: The financial matters are being managed and controlled by the government
and it makes various policies. So it is required for the Polo mints to follow all the compliances
which are made by the government supply of products does not get affected. If taxes has been
increasing by the government than it can influence the supply of products which is not good for
the company. As this below graph reflects the decreased supply of Polo Mint:
As this diagram shows that if prices of company will maximize than supply of its products
can be reduced because consumers does not show their interest to buy the products of company.
Due to the fiscal conditions supply can be affected (Fotaki and Prasad, 2015).
Technical progress: As the supply can be affected with the technical progress. As supply of
Polo Mints can be effected with the technology enhancement so it is important for the
management of company to consider this factor for the growth and success of business.
Improvements in transportation process: Due the improvement in technology, the
transportation process has been improved continuously. Supply of products can be maintained if
goods will reach at time with the help of effective transportation system. It is important for the
management of Polo Mints to make the transport system effective so that product can be deliver
as per the requirement of consumers and company can generate higher profits when goods can be
deliver as per the demand. So manager of organisation have to manage the supply in order to
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fulfil the requirements of consumers. With the help of below diagram incremental supply of Polo
mints can be reflected due to the distinct reasons
As the above diagram shows that slight reduction in price may result in incremental price
and it can be the reason for change. Due to the monopoly and transportation system this is caused
(Bachmann and Sims, 2013).
5. Impact the changes in supply & demand will have on price
As the supply and demand can change the prices and it happens because of following
reasons if supply of products of Polo Mints will increase than the prices of products will change
and it can be decrease because buyers will not show their interest to purchase the goods of
company. If demand of products are more where the supply is limited in that case the prices of
products can be increase because consumers will show their interest to purchase the products of
organisation. So it is important for the corporation to consider the supply as well as demand so
that prices dose not much change and it does not affect the business of organisation. For the
management of firm it is important to analyse the market conditions in order to generate higher
revenue and also by increasing the sales and it is helpful for the business growth of firm and it is
good sign for the corporation and its business. It is the responsibility of management to take
effective decisions in that order (Bocken and Evans, 2013).
6.Supply and demand diagram to illustrate the impact of changes in supply and demand upon
price
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With the help of diagrams it will be easy to understand that impact of changes in supply and
demand on prices. From the supply diagram it has been analysed that if supply is Q1 and the
price are P1 and when supply has been shift from Q1 to Q2 than prices can be impact and it can
be reduce from P1 to P0 and it shows that if supply will increase in the market and number of
enough buyers are not available in the market than prices of products can be reduce. As from the
demand diagram it has been analysed that If price is P2 and quantity is Q2 and when price will
increase than quantity will also increase and it is possible when company provide superior
products to the consumers. As a result organisation can earn higher profits. So it is important for
the Polo mints to analyse the supply and demand so that its sales does not get affected and it is
helpful for the firm to enhance the profitability. For the growth of business it is important that
price are formulate in that way which is helpful for the benefit of organisation. So it has been
analysed that it is required to understand that impact of changes in supply and demand on prices.
If company will take effective decisions by considering these factors than business will grow and
get success (Al-Mubaraki and Busler, 2013).
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CONCLUSION
From this assignment, it has been concluded that the two major terms of economy that are-
supply and demand defines overall operations of marketplace. It shows the behaviour of
producers and sellers as a group or individuals which aid economist in determining entire process
of supply and demand of a commodity at various prices. Through analysing both concepts,
companies deal at small sectors can easily access the market conditions and offer their products
on profitable price rates accordingly. This would further, helps in taking better decisions for
setting price strategy and delivering bulk of commodities at particular marketplace. As there are
various factors present in business environment that impacts on both supply and demand
processes. Therefore, to increase and maintain sales performance, it is essential for organisations
to analyse impact of same before offering their commodities. It is important to understand that
impact of changes in supply and demand on prices.
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REFERENCES
Books and Journals
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strategy: A literature review. International Journal of Management. 30(1). pp.362-373.
Bachmann, R., Elstner, S. and Sims, E. R., 2013. Uncertainty and economic activity: Evidence
from business survey data. American Economic Journal: Macroeconomics. 5(2).pp.217-
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Bocken, N., Short, S., Rana, P. and Evans, S., 2013. A value mapping tool for sustainable
business modelling. Corporate Governance. 13(5). pp.482-497.
Fotaki, M. and Prasad, A., 2015. Questioning neoliberal capitalism and economic inequality in
business schools. Academy of Management Learning & Education. 14(4). pp.556-575.
Hall, J. C. and Lawson, R. A., 2014. Economic freedom of the world: An accounting of the
literature. Contemporary Economic Policy.32(1). pp.1-19.
Kose, M. A., Otrok, C. and Prasad, E., 2012. Global business cycles: convergence or
decoupling?. International Economic Review. 53(2). pp.511-538.
Maglio, P. P. and Spohrer, J., 2013. A service science perspective on business model
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Piergiovanni, R., Carree, M. A. and Santarelli, E., 2012. Creative industries, new business
formation, and regional economic growth. Small Business Economics.39(3). pp.539-
560.
Rogerson, C. and Rogerson, J., 2012. Business development and local economic development in
South Africa: Addressing the disconnect. Acta Academica. 44(2).pp.41-69.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Temiz, D. and Gökmen, A., 2014. FDI inflow as an international business operation by MNCs
and economic growth: An empirical study on Turkey. International Business
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