Economic for Business: Impact of Inputs, Costs, and Production Decisions on Supply of Goods and Services in UK

Economic for business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Why inputs and costs impact the supply of goods and services in terms of production
decisions......................................................................................................................................1
2. Explain the perfect competition market and how it impact the supply of goods and services
by applying in any UK based industry........................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
*Krugman and Wells. 2020. Essentials of Economics. New York: Worth Publishers. Pages 355-
451....................................................................................................................................................9

INTRODUCTION
Economics is the term which assist in making decision with the utilisation of resources. These
resources are utilised to produce the goods and services for attaining a goals. Supply is the words
which explains the outflows of wares with the aim of fulfil the need of the consumers. The
supplier of goods have to be updated about the requirements of the market and about the trends
also. In this report, the inputs and cost which are important for the supply of the equipment is
justified by considering the economy of UK. The effect of the production decision on the supply
of goods also explain by having example of the economic condition in UK. The role of perfect
competition in the long and short run market is explained and the components which can affect
the supply of products and services in the manufacturing industry is explained.
MAIN BODY
1. Why inputs and costs impact the supply of goods and services in terms of production
decisions.
Supply: It refers to the sum total of amount of goods and services which are available to
the customers. The supply of products have been done according to their demand in the market.
After that, the products are sold in the competitive market place. The basic concept of demand
and supply state that the increase in the prices of goods leads to the increase in supply of goods
too and decrease in the prices of goods implies reduction in the supply. In simple words, it can be
said that the prices and supply of products have a positive relation. Raw material, labour etc. are
consider as the input and its prices combine with the cost of goods to make the final selling price.
Basically, supply means the amount of products which a businessman can make available to its
customers.
Law of supply implies that there is a positive relationship among prices and quantity
where other factors remain constant. It has been found that the behaviour of manufacturer or
producer changes according to the prices of products or services along with the change in time.
It can be seen by the use of graph which is given below:
1

above mentioned graph is showing the direct positive relationship between the quantity
suppli8ed and prices. The graph is showing upward sloping as when the price of good was p3,
the supply P6 was Q3. With the increase in the prices, the quantity also increase and shift to Q2,
Q1 and so on.
Input: Land, labour, capital and entrepreneurship are four categories of factors of input.
It has a vital role in the creation of goods and services which can be measured by the Gross
Domestic Product of United Kingdom.
 Land: It can be defined as the natural resource which is available on the earth on which
the crops, buildings and offices come. It covers a wide prospective in the economy of
country. Land also include oil, oceans, solar energy, coal, sea, rivers and many more as
renewable and non renewable resources.
 Labour: A mental and physical capacity is required for the purpose of producing goods
and services which is generally known as labour. The supply of labour has been made
on the basis of population, leaving of work and age attitude. It can be measured on the
basis of output of a person after completing his working time.
 Capital: It refers to the amount of currency which have been used for the purpose of
doing production of goods and services. It include factory cost, equipments, commercial
buildings, machinery and many more.
2