Economics for Business

Economics For
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Factors that affects or influence price of private housing with the help of Demand & Supply
graphical analysis........................................................................................................................1
TASK 2............................................................................................................................................7
Governmental and economic policy that developed to influence the demand for private rental
housing in the UK.......................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics is the study through which usage of limited resources in the society is
measured for accomplishment of different needs. Businesses are highly influenced through
economics as demand, supply, expenditure production saving are all influenced through
economic conditions and factors in the nation. This project report is based on the analysis of
main factors for determination of prices of private rental housing in United Kingdom (Achim,
Borlea and Mare, 2016). Together with this various governmental policies that influences the
demand for private rental housing in UK is elaborate in the project report. All these analysis are
made to make a clear estimation of demand and supply in the economy so that organisations
policy can be established to generate maximum revenue. These analysis are demonstrated
through various examples and graphical representations.
TASK 1
Factors that affects or influence price of private housing with the help of Demand & Supply
graphical analysis
The concept of demand and supply is important for business organisations and there are
number of factors that directly or indirectly affects demand and supply in the market. Pricing of a
product have a grate impact on demand for goods and services and there are number of factors
that affects pricing of goods and services offered. Estimation of demand and supply helps
business organisation to prepare and assist in various factors to become more competitive as per
the present market scenario. Concept of law of demand and factors affecting demand of rental
housing in UK is defined as follows-
Law of Demand: Their are number of factors affects demand for goods and services in
the market. Law of demand keeps all the factors constant reflects a relationship among price and
the quantity demanded (Law of demand, 2019). This law defines that demand and price of any
good or service possess a inverse relationship among each other. i.e. when price of goods and
services will move upward then demand for goods and services move downward and vies-versa.
Law of demand helps to schedule the market demand for various products and services at
different prices. All the factors in the market in long run reflects their positive and negative
impact on the demand of goods offered.
1

The law of demand is represented through graphical representation in which X-axis
represents quantity demanded and Y-axis defines price. A change in price on Y-axis will reflect
its impact by change in quantity demanded on X-axis. Law of demand also mentioned that it is
not essential that change in price and quantity demanded will be in the same ratio. Graphical
representation of law of demand is as follows-
Source: Demand Curve, 2019
This demand curve represents that a change in pricing of private rental housing in UK
will bring change in the quantity demanded. For example- when price charge for the rental
housing was £60000 per year then demand was high as presented in the graph. When the pricing
shifts upward to £90000 per year then in that case quantity demanded become low. Pricing effect
brings one of the most visible effect through law of demand. Their are other factors that have a
grate impact on the demand of private rental housing in UK. These factors are determined as
follows-
Affordability: Rising level of income of general public enhances capacity to afford and
spend more on housing facilities available in UK economy (Athey and Luca, 2019). As
economic growth in a country leads to rise in the demand of housing facilities. Demand for
housing is a luxury facility and change in affordable capacity of an individual have a grate
impact on the demand for rental housing facilities in UK.
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Illustration 1: Demand Curve, 2019