Economics For Business - Assignment

ECONOMICS FOR
BUSINESS

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question 1. The main factors which are effecting to price of English wine in UK with the use
of supply and demand analysis...................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The term economics for business can be defined as a kind of study which is related to
analysing application of economic theories and methodology to businesses (Brückner and
Pellegrino, 2016). Basically, it is very important for business entities to find out various aspect of
economic sector and should take decision accordingly. Specially, demand and supply are two
main terms which can impact to businesses. It is essential for companies to make their plans and
policies as per the demand of customers. Herein, the project report theoretical factors which
effect to supply and demand curve are mentioned in broad sense as well as its impact on price of
eggs in UK is described.
MAIN BODY
Question 1. The main factors which are effecting to price of English wine in UK with the use of
supply and demand analysis.
The supply and demand are interrelated with each other. This is so because if demand
increases then supply also increases as well as if demand decreases then supply also gets down.
So it is the main relationship between demand and supply. To understand this concept, it is
important to know about demand and supply which as follows:
Demand- It can be defined as quantity of products for which customers are willing to buy
on different prices during a particular time period. As well as this relationship between price and
quantity of demand is known as demand curve.
Supply- This can be defined as quantity of products and goods available for buy on any
specific price.
Factors which are effecting to supply and demand curve- There are various kind of
factors that are impacting to supply and demand curve (Shackle, 2017). Some of them are
mentioned below such as:
 Price fluctuation- The price of products can not be same for a long time period, it
changes as per the market condition. If price of products and service decreases then
demand increases because people get able to acquire the products on lower price due to
this supply also increases. While on the other hand, if prices increase then demand
decrease.

 Income level- This is also an another important factor which impact to the supply and
demand curve. This is so because when income level increase then they demand increases
in market. While on the other hand, if income level decreases then demand also
decreases. Overall, this factor becomes as a reason of shift in the demand & supply curve.
 Seasons- It is a kind of factor which is not under control of market but impact to the
demand and supply (Gabaix, 2016). For example in the winter season, the demand of
warm cloths will be high and due to this supply will also increase. On the other side, in
the season of summer there will be no demand of warm cloths so this factor effect to the
supply and demand curve.
So these are the main factor which are effecting to then supply and demand curve. In the
aspect of price of products and services, the demand & supply are very important this is so
because:
 When demand is high- If demand of products is high then price will high. This is so
because when people will demand more then supply will be shortage which leads to
higher price. Such as in the aspect of UK, if demand of eggs is high then price will also
high. While on the other hand, if demand is low then price will be low.
 When supply is high- In the market, if supply of any product is sufficient then prices will
be balanced. Such as in the aspect of UK, if supply of eggs is enough then price will be

low. On the other hand, if supply is not enough then demand will high and as a result
prices will be high.
Equilibrium is using a supply and demand diagram- The term equilibrium means a condition
of “balance”. In the case of supply and demand, the equilibrium condition raises when demand
and supply are in balancing condition. For example if people are demanding more and relation
to supply is enough then there will condition of equilibrium (Elobeid, Lele and Kaifi, 2016.
Same as in the context of UK, the equilibrium condition will raise when there is a balance in
which demand and supply of English wine. As well as price will also in a balancing mode.
Below a diagram is presented which indicates the point of equilibrium:

Explanation of factor that leads to change in demand- The demand of products and services
is change as per the economic conditions. There are some factors are mentioned below which
becomes reason of change in demand such as:
 Taste and preferences- This is one of the important factor that impacts to the demand of
goods. It is so because if a product for which tastes and preferences are high then demand
will more. Basically, taste and preferences of products get change which becomes a
reason of change in demand. For example in the context of English wines, the people like
the test and prefer more due to this demand is also high (Elobeid, Lele and Kaifi, 2016).
 Income of people- It is an another factor which impacts to the demand of goods and
services. If income level is low then demand will be less for products because in the
absence of enough fund people will acquire cheap product or will look for any substitute
product. Like in the aspect of UK, if income level of people will decrease then due to this
demand will decrease and people will search for any other cheap product.
 Advertisement expenses- The advertisement expenses done by a firm on promotion of
products and services leads to increase and decrease in demand. If an organisation makes
too much expenses on advertisement then demand will increase because people will like
to know about new product. On the other hand, if a firm makes very low expenses on
advertisement then demand will be low because people will not aware about product.
Same as in the aspect of English wine, companies make too much expenditure on
promotion and due to this demand is high because customers want to explore (Gabaix,
2016).
 Social customs and festivals- This is also an another important factor that effect to the
demand of products and services. It is so because people demand more in any particular
festival. Such as in UK, people demand more for the English wines in the season of
Christmas. So it shows that demand effects on any specific festivals. While on the other
hand, in the normal days the demand remain same.
What leads to change in supply:
Supply defined as amount of product as well as service that is related to a firm is willing
to offer at a particular area of a market for sale out in set period of time. The relationship among
the quantity of product sell out and price of a same that a company take interest for selling is
known as supply relationship. The term of supply mainly influenced by the input price of raw

materials, changes in the technology, government strategy, market size, prospect for future
market situation and more. In English Wine, it is mostly influenced by the input price of raw
material as well as size of market.
 Price of raw materials – The price of raw materials utilised by the manufacturing
company to develop and improve infrastructure is speedily arising in all over the world.
There are consisting of cost of few key materials like fruits, water and more. Thus, the
particular factor mainly influence the procedure of supply of English wine as well as
services provided by manufacture company (Hummel, Pfaff and Rost, 2018). Unlike
demand of product directly connected with the price of supply. De,and and supply both
have positive relation because when demand increase of English wine that time price
increase of product. Future price of product influence to supply of a product. If the price
of English Wine will arise that time supply of product will be decreased.
 Market Size – With developing in social process, rising population, speedily
industrialisation and more. The size of market improve due to high market size improve
high economic development. Hence, it intensify the demand of English wine products in
the UK market which could be finished by supplying like commodity as per the demand.
There are many factors which is influenced to market size after that it will effect to
supply like economic derivations, minimise of resources, price of workers and more. In
the UK market mostly people take interest to buy English wine so it provide opportunity
to fulfil the demand of customer and supply on time of the product.
 Natural conditions – UK environment directly affects the supply of particular
commodities. Such as, the supply of English Wine based on the monsoon because
produce the product need good climate. Hence, the supply of these commodities decrease
at the time of dryness. To make of English wine required to appropriate time like winter
when fruits are not wastages and easily utilised in the procedure. So it is understand that
natural conditions directly affect to supply because if company face bad weather that time
cannot supply Wine on the time (Brückner and Pellegrino, 2016).
 Government Strategies – In the UK government develop strictly every policies and focus
on the manufacture who is produced English wine. Due to changes of strategies it is
directly influence to company and easily do not supply products and services. Such as

fiscal policy and industrial policy has perform great impact on the supply of product. For
instance – due to increase tax on excise duties would minimise the supply of a product.

Impact of supply and demand on prices:
Demand can be refers as a preference of customers as well as their desire to purchase
products or services offered by company. It can be define as a economical principle that is affect
pricing strategies of a company. Demand is a most important element in of setting prices of
specific products as demand represent willingness of customers to purchase products. If a
company is selling its products in market area them it can have low and high demand as per
requirement of customers.
Supply is define as a availability of a product is market area. It is a fundamental concept
of economics that can be describe as a total amount of product availability in specific market
area. Supply of a product is related to accessibility of a specific product in market which can
successful fulfil requirement of customers. Supply of any product is completely based on
company manufacturing process as well as its selling in particular market area. It can be refers as
a amount of resource that can a firm can use to sell its products or services. Company must have
that amount of supply that is able to satisfying needs and wants of customers.
Supply and demand of a product will have major impact on its price. The law of supply
and demand can be describe as a economical theory that helps in explaining products demands
and supply in market area. Increase or decrease in demand and supply of a product will have
major impact on selling and purchasing of a English Wine in market area. There are four
different ways thought which demand and supply impact on this product can be represented.
If demand increase and supply remains same: When there is increase in demand of a product but
company is supply its products in same manners. This leads to higher equilibrium price as well
as higher quantity. When customer are demand English Wine product and company is supply it
same then it is a chance of a company to sell product as quite higher price.
If demand decrease and supply remains same: When demand and supply falls under this then it
leads to lower the equilibrium in lower quantity of products. Decrease in demand when supply of
product remains same refers that customer are not liking or purchasing that product but company
is manufacturing or selling English wine product in same manner. Company have to sell its
products as lower price.
If demands remain same and supply increases: When company supply of product in market
increase but need and wants of product in customers remains same. Company needs to change in

pricing strategies in order to attract customer. Organisation needs to lower the price of English
Wine product when demand of product is lower then supply.
2

If supply decreases and demands remain unchanged: When company is not able to supply
product in market as per requirement of customer then it leads to higher equilibrium price and
lower quantity. Company can increase price of English wine product.
Impact of change in supply and demand on price- The supply and demand effects to the price
of products and services. Below this is mentioned below in broad sense such as:
 If demand increases and supply remain unchanged- This is a kind of situation in which
demand of products and services get increases but supply remain constant (Bleikh and
Young, 2016). Due to this price of products and services increases. For example in the
case of UK' s market if demand of English wine increases but supply remain unchanged
then price of wine increase. It is so because the if people will demand for more then
supply will decrease then price will automatically increase.
 If demand decreases and supply remains unchanged- In this condition, if demand
decreases and supply remain unchanged then price will decrease. Same in the aspect of
UK, if demand of English wine decreases then companies have to decrease the price of
wine. This is so because they have to sell out their product only to raise the demand. So it
is also an another condition of demand and supply in which price decreases.
So these are main aspect which impact to the price of products and services.
3

4

CONCLUSION
From above project report it has been concluded that it is important for businesses to
assess the factor due to which supply and demand get effected. As well as in the project report,
various kind of factors are concluded that impact to the change in supply and demand of
products. Along with change in supply and demand also effect to the price of products. In the
report, various types of diagrams are presented that stats about the relation of demand and
supply. Apart from it, equilibrium condition is also mentioned in which demand and supply
remains balancing.
5

REFERENCES
Books and journals:
Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural perspective.
Routledge.
Albort-Morant, G. and Ribeiro-Soriano, D., 2016. A bibliometric analysis of international impact
of business incubators. Journal of Business Research. 69(5). pp.1775-1779.
Bleikh, H. Y. and Young, W. L., 2016. Time Series Analysis and Adjustment: Measuring,
Modelling and Forecasting for Business and Economics. Routledge.
Brückner, S. and Pellegrino, J. W., 2016. Integrating the analysis of mental operations into
multilevel models to validate an assessment of higher education students’ competency
in business and economics. Journal of Educational Measurement. 53(3). pp.293-312.
Elobeid, D. E., Lele, U. and Kaifi, B.A., 2016. Corporate Social Responsibility in Higher
Education Institutions: The Experience of the College of Business and Economics at
Qassim University. International Leadership Journal. 8(1).
Fizel, J., 2017. Handbook of sports economics research. Routledge.
Gabaix, X., 2016. Power laws in economics: An introduction. Journal of Economic
Perspectives. 30(1). pp.185-206.
Hill, S., 2016. Managerial economics: the analysis of business decisions. Macmillan
International Higher Education.
Hummel, K., Pfaff, D. and Rost, K., 2018. Does economics and business education wash away
moral judgment competence?. Journal of Business Ethics. 150(2). pp.559-577.
Raja, P. and Pahat, B., 2016. A review of training methods of ANFIS for applications in business
and economics. International Journal of u-and e-Service, Science and Technology. 9(7).
pp.165-172.
Seaman, B. A. and Young, D. R. eds., 2018. Handbook of research on nonprofit economics and
management. Edward Elgar Publishing.
Shackle, G. L. S., 2017. Epistemics and economics: A critique of economic doctrines. Routledge.
Vasigh, B., 2017. Introduction to air transport economics: from theory to applications.
Routledge.
Webster, T. J., 2018. Introduction to game theory in business and economics. Routledge.
Online
Demand and supply change. 2009. [Online]. Available through:
<https://www.intelligenteconomist.com/supply-and-demand/>
6