Economics for Business Assignment - Polo mint UK

ECONOMICS FOR
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Relationship between supply, demand and price........................................................................1
Explaining equilibrium using supply and demand diagram........................................................3
Explaining what results in change in demand.............................................................................7
Explaining reason behind change in supply ...............................................................................8
Impact of change in supply and demand over price of product..................................................8
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Economics for business refers to a brief study of various factors of the economic
environment. It is a quantitative method of analysing overall business of the firm along with
various factors that leads in diversifying the overall structure Polo mint UK. In the present
assignment, a description of demand and supply and gaining equilibrium through it has been
included. Reasons behind change in demand and supply are also been explained. Further, the
study also includes impact of change in demand and supply over price of product and services.
Moreover, the study also shows diagram as to provide a better understanding of change in
demand and supply over price.
MAIN BODY
Relationship between supply, demand and price
Demand
The term demand refers to the amount of goods and services that customers wants to
purchase at a certain price (Grossman, 2017). It shows the desire of customers of market to buy a
specific product or services in the competitive market. As per analysing the operational scenario
of Polo mint UK on which if professional pauses a stable price over the product which will bring
them effective demand.
Supply
Supply can be defined as a quantity of products or services served by the companies in
market for the purpose of fulfilling demands and needs of customers of Polo mint UK.
Relationship between demand, supply and price
For the purpose of analysing relationship between these three element, it is necessary to
understand the law of demand and law of supply as well.
Law of demand
As per the law of demand, if all the factor remains same except the price, demand of
product would be changed. There is an inverse relation between demand and price of the
product or services. Therefore, if the price of Polo mint UK rises in the market, it would result in
decreasing the demand, as customers would be substituted towards other products having lower
price.
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On the other hand, in case price of product reduces it would lead in attracting customers
towards Polo mint UK’s product, through which its demand would be risen in the market. Both
the conditions results in shifting of demand curve.
Law of supply
Law of supply states that if price of product changes and all other factors remain
unchanged, it would result in changing the quantity of supply in the market. Further, as per this
law, there is direct relation between price and quantity of supply. In case, the price of product
rises, with a view to increase the profitability of business, company would increase the quantity
of supply in market.
Whereas, at the time of reduction in price of product or services, Polo mint would wait
for increase the price of product, as selling product or services would result in reducing
profitability of product. In this regard, increase in price would result decreasing the supply
quantity of product in equal ratio.
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Illustration 1: effect of price of demand curve
(source: Economics Basics: Supply and Demand, 2019)