Economics for Business: Supply and Demand in the UK Food Industry during COVID-19

This report explores the principles of supply and demand in the UK food industry during COVID-19. It discusses the shifts in supply and demand curves, the concept of equilibrium, and the impact of shortage and surplus. It also examines market failures and the interventions and economic policies implemented by the UK government to address these issues. The report provides insights into how COVID-19 has affected the food industry and the strategies adopted to maintain supply and demand.

Economics for
Business

EXECUTIVE SUMMARY
The understanding of monetary cycle can be explained through Economics. The subject
uses demand and supply measures to determine the consumption of particular goods within the
economy. The demand and supply of goods are affected by various market aspects like fashion,
income, preferences. In the recent era, market especially food market is high affected leading to
decline in demand due to widespread pandemic of COVID- 19. The study is executed on
COVID- 19 showing the shifts of market which is affecting the market equilibrium. The report is
performed in two parts so that explanation is sheer to understand.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION ..........................................................................................................................4
MAIN BODY..................................................................................................................................4
TASK 1............................................................................................................................................4
Supply Chain and movement of its Curve:............................................................................4
Demand Chain and movement of its Curve:..........................................................................7
The shifts in demand curve can be studied as under: ............................................................7
Demand curve affecting food industry of UK can be seen as: ..............................................8
Explain supply and demand principles applied to the UK food supply in 2020....................9
Explanation of equilibrium price and quantity, and how equilibrium shifts with supply and
demand curve shifts...............................................................................................................9
Explanation of shortage & surplus.......................................................................................10
TASK 2 .........................................................................................................................................10
Discuss and identify market failures and along with this explain UK government interventions
and economic policies that are made for supply and demand in food industry. .................10
The economic principle of market failure and government intervention in the supply and
demand of food-related goods in the UK economy in 2020................................................12
CONCLUSION ............................................................................................................................12
REFERNCES:...............................................................................................................................14
Books and Journals:.............................................................................................................14

INTRODUCTION
Economics is a social science technique which describes production factors, consumption
factors, distribution factors of existing goods and services. It caters how resources are procured
by respective organisations in order to carry operations. Business Economics is an extended
form of financial performances of organisation which facilitates the operations. Along with
studying the market related environmental issues it embraces the shortage of funds and raw
materials which hamper the production. The report studies theories and principles which affect
the food industry of UK (ARHAM and HATU 2020). It examines demand and supply factors
that has affected consumption and production in times of COVID- 19. The policies which has
been formulated looking to the adverse conditions of COVID- 19 by governing bodies is also
been explained in context of reducing the ill effects of harm caused by disastrous pandemic.
MAIN BODY
TASK 1
Demand and Supply of Food Industry of UK can be seen as a link between the quantity
of production that producers want to sell at a determined rate as compared to that of the prices on
which consumers want to purchase. This defines the setting of price of a respective product or
service and its usage. When they both are equal, economy develops situation of equilibrium.
Supply Chain and movement of its Curve:
Supply can be termed as flow of goods and services by effectively managing them, along
with raw materials. The curve of supply chain is graphical representation of association between
cost of goods and supply of the same. As per the Krugman & Wells theory it can be seen that
government works for developing the supply chain by taking appropriate measures. Due to this,
there are many factors that can bring shift in supply curve. The shifts are caused because of
change in price which is also due to several environmental factors. The curve either shifts on
right side or on left side (Krugman and Wells 2017).

The factors which affect the shift in supply chain curve can be seen as: Existing Circumstances: The factors which are prevalent affect supply as it can be seen
that recent case of, For example COVID- 19 has affected the supply negatively as people
were having limited income and were bound to stay home (FAKIR and JUSOH 2020).
Same way weather circumstances also affects supply of food products i.e. when weather
is pleasant, supply will increase whereas when weather is unpleasant supply will decline. Technological Advancements: In the era of modernisation and globalisation, consumers
are more attracted towards new technological changes which makes operations attractive.
When an organisation brings technological advancements like usage of digital platforms
for sales. This will facilitate operations, increasing the supply of production. For example
In times of COVID- 19, people were reluctant to step out of their homes, companies
working with technological advancements catered needs and resulted in high demand and
supply of food products.
The shifts in supply curve can be studied as under:
 Shift in Supply Curve to Right: The shift of supply curve to right side affects positively to
the economy by showing increase in quantity to be produced as well as supplied and
lowering the prices. The consumers are attracted to a product when it is offered at low
rates which increases the demand, thus affecting the supply to be increased.

 Shift in Supply Curve to Left: The shift of supply curve affects negatively to the economy
by showing decrease in quantity which is required to be produced and supplied due to
increase in prices. This makes hard for consumers to purchase, thus their interest is
shifted. Increase in prices will affect adversely the industry as supply of goods is reduced
which will result in increase in inventory.
Supply curve affecting food industry of UK can be seen as: Availability of Goods: For example, In times of COVID- 19 it was seen that due to lock
down, several people were unable to procure desired food items (Gnewuch and Wohlrabe
2018). It was because production was stopped, employees were reluctant to work,
transportation was blocked and others. This reduced the supply of goods in market thus
affecting the supply curve.

 Income of Consumers: For example, In times of COVID- 19 its was seen that as people
were staying home, some of the individuals became unemployed which in turn affected
their financial state. This made them reduce their buying capacity and resulted in
affecting supply curve.
Demand Chain and movement of its Curve:
Demand refers to the amount of goods that buyers are inclined to buy at the given prices
as determined by producers. The relationship between price of good offered and quantity which
is demanded can be studied as demand curve. Demand curve is regarded as graphical
representation among price of a product in relation to quantity demanded for the same.
The factors which affect the shift in demand chain curve can be seen as: Government Policies: The policies framed by governing bodies of UK affects the
demand of products (Keung and Shen 2017). As the policies made can result either in
increasing the prices or reducing the same which will affect the pockets of consumers.
This will result them buying either more or less. Price of Related Goods: When the price of substitute goods are changed it will be
affecting the demand of goods produced. When prices of related goods are increased, the
price of other good will be constant, enhancing demands and vice versa.
The shifts in demand curve can be studied as under:
 Shift in Demand Curve to Right: The shift of demand curve to right is because of increase
in demand of respective product. This is due to reduction in prices which makes it

affordable to purchase. There are various causes of this factor which can either be
reduced prices or increase in prices of related product.
 Shift in Demand Curve to Left: The shift of curve to left is caused due to reduction in
demand which is due to raised prices of the respective product (Massa, Tucci and Afuah
2017). The reduction in demand can be caused due to level of income, shopping
preferences and much more.
Demand curve affecting food industry of UK can be seen as: Change in tastes and preferences: Due to dynamic trends and choices of consumers
prevalent in market, demand of a particular goods or service is either reduced or
increased, which in turn will affect the demand. As corona virus was spread, sale of
products was affected as people were buying only essential items.
 Change in Population: The demand is affected either due to increase or decrease of
population. When there is rise in population of females items related to them will be

demanded more and if population of males increase products associated to them will be
in high demand (NGUYEN and TRUONG 2020).
Explain supply and demand principles applied to the UK food supply in 2020
Principles of supply and demand applied to UK food industry in 2020 can be studied as:
 The food produced as demanded and supplied was authentic so that products can be
bought with reliability.
 The food products supplied and demanded are nutritious without compromising with
quality.
 Industry used high ethical standards which gained focus of consumers while supplying
the demanded goods which raised involvement of users.
 Products demanded by consumers which were supplied were sustainable and durable.
Explanation of equilibrium price and quantity, and how equilibrium shifts with supply and
demand curve shifts
When quantity of goods demanded is same as compared to that of quantity of goods
supplied, it creates a situation of equilibrium. This shows that both consumers and producers
agree on a same decision which will raise the economic growth. The prices of products are
decided on the basis of factors that are studied before and if they are evaluated, prices will be
matched with that of the expectations. This will bring growth in market. On the basis of this
method only the governing bodies of UK are bound to develop strategies which will be affecting
both the parties. The government frame policies which affects the cost of operation of the
producers and leads to either increase in rate of goods or services or can decrease the prices of
goods and services. Also the formulation of policies will affect buying capacity of individuals as
government policies can either increase or decrease the rate of taxes applicable on the nature of
goods. This affects the price of raw materials as well which again will increase the prices
(Riyanto and Panggabean 2020). Due to COVID- 19, supply and demand curve is affected
enormously as demand of many food items was increased many folds and that of some articles
were reduced highly. Thus to match with demand and supply, there is a need of properly
accessing the factors and then setting prices in order to maintain equilibrium.

Explanation of shortage & surplus.
The shortage and surplus of products or service affects the equilibrium of an economy.
When any goods or services are in shortage, the prices of respective product will be increased.
This is because when products is hardly available in market its demand will increase. On the
other hand if the products or services in the market are more than as demanded by the consumers
will result in surplus of respective product or service. In view of this when demand is less and
supply is more this will result in reduction in prices of the goods and services. This will affect
the demand and supply curve as there will be major changes in the determinants. Shortage of any
product or service refers to the scarcity and on the other hand surplus refers to the excess of the
same. Because of COVID- 19, UK faced shortage of essential commodities like fruits,
vegetables, luxurious commodities like cars, jewellery, durable as well as non durable goods
which are required by the market. But the medical items were in surplus as was available on
every outlet looking to the safety and security needs of individuals. The surplus items were
masks, sanitisers, medicines and other health care equipments.
TASK 2
Discuss and identify market failures and along with this explain UK government interventions
and economic policies that are made for supply and demand in food industry.
There are many cases that can lead to market failures in respect of a particular product or
service. The recent times of COVID- 19 has lead to adversely affecting whole UK market. This
has been ruining the demand and supply chain of food industry in the market. The food industry
individually along with hospitality industry also suffers as it even caters the need of food
products. The failures and issues which the respective food industry faces results adversely and
makes economy suffer. The policies and regulations formulated by the governmental body of
United Kingdom is trying to bring change in a positive manner.
The list of failures which has been caused because of government body interventions can be seen
as:
 There are times when governmental institutions frame policies but they are unable to
implement them and as a result there is an increased rate of corruption. This hampers the
operational process of an economy.

 Government Intervention has caused Brexit agreement and because of this there has been
a major shortage of labour. This is a result that production process is disrupted and along
with this there has been an increase in labour turnover ratio. This is a reason that at times
there is shortage of food items or any other products in an economy.
 There has been a large shutdown of food outlets because of reduced labour and resources
which is available for working procedure. Governmental bodies has made several laws
after COVID- 19 which is very hard for organisations to follow and as a result they are
discontinuing. This is due to negligence in providing support to the entrepreneurs and
several industrialists.
 Negligence on misconduct which is faced by individuals has impacted the mental and
physical being of individuals which has reduced their purchasing powers, thus reducing
demand of goods which in turn leads to reduced supply (USMANANDRIYANI and
PAMBUKO 2019).
Apart from this, governmental bodies of United Kingdom has taken several effective
measures which is a result that they are working for upliftment of the economy. This has worked
in helping out with dealing some of the causes in times of COVID- 19. Such measures can be
seen as: Taxes and Subsidies: Governmental Bodies are bound to charge taxes on several
operations which increases the cost of production. On the other hand they provide
subsidies to some sectors which work for reducing the cost of production which in turn
reduces the prices. Fiscal Policies: The fiscal policies of government are a result which helps in adjusting
the cost which is required to be spent in form of infrastructural frameworks and amount
incurred through taxes as a source of revenue generation. The fiscal policy manages the
amount spent and incurred of behalf of government. Poverty upliftment programmes: This programme is a result where government frames
policies which works in accordance to reduce the gap in income level of individuals. This
can be achieved by eradicating poverty through reducing prices and providing subsidies
to under privileged sectors (Weresa 2019).
 Controlling rise in Price: The government also works for reducing the cost of production
by giving tax subsidies which will control inflation and increase savings of the

individuals. Prices of commodities especially that of essential commodities are important
to be reduced so that they are reachable to every one.
The economic principle of market failure and government intervention in the supply and demand
of food-related goods in the UK economy in 2020
The market failure is a result government intervention in the supply and demand of food related
goods. It is identified that government should intervene only that much in their supply and
demands that no one comes in a problem. But due to excess intervention UK's market get into
failure. It is very important for every organisation that they should make sure about market
conditions.
CONCLUSION
All in all it can be concluded from the above studied report on the economics for
business that demand and supply are the factors which helps in bringing equilibrium in the
economy. There is an urgent need of managing the external as well as internal factors so that
they can be catered and as a result they will be helping in meeting demands of consumers which
is received in food industry. When prices are optimal and affordable, supply of the respective
product will increase. The recent era of COVID- 19 has impacted enormously to the UK food
industry along with the whole world. There has been a discussion which shows how demand and
supply factors are affected. There are governmental policies which affects the standards of an
economy because there are times when government is unable to formulate all the strategies
which results in ill effects to the economy. The demand and supply curve shifts from left to right
due to the determinants leads either in equilibrium or in critically affecting factors. Along with
this it can be concluded that government faces a lot of issues in executing the policies as there is
huge population and many ill effects that reduces the capacity to perform. When policies are
followed in appropriate manner, it will result in development of economy.

REFERNCES:
Books and Journals:
Krugman, P. and Wells, R., 2017. Volkswirtschaftslehre. Schäffer-Poeschel.
ARHAM, M.A. and HATU, R., 2020. Does Village Fund Transfer Address the Issue of
Inequality and Poverty? A Lesson from Indonesia. The Journal of Asian Finance, Economics,
and Business, 7(10), pp.433-442.
FAKIR, A. and JUSOH, R., 2020. Board gender diversity and corporate sustainability
performance: Mediating role of enterprise risk management. The Journal of Asian
Finance, Economics, and Business, 7(6), pp.351-363.
Gnewuch, M. and Wohlrabe, K., 2018. Super-efficiency of education institutions: an application
to economics departments. Education Economics, 26(6), pp.610-623.
Keung, C. and Shen, L., 2017. Network strategy for contractors’ business
competitiveness. Construction management and economics, 35(8-9), pp.482-497.
Massa, L., Tucci, C.L. and Afuah, A., 2017. A critical assessment of business model
research. Academy of Management Annals, 11(1), pp.73-104.
NGUYEN, A.T.K. and TRUONG, L.D., 2020. The impact of index future introduction on spot
market returns and trading volume: Evidence from Ho Chi Minh stock exchange. The
Journal of Asian Finance, Economics, and Business, 7(8), pp.51-59.
Riyanto, S. and Panggabean, M., 2020, February. The Impact of Leadership, Organizational
Culture and Organizational Climate on Employee Job Satisfaction (Case Study: PT
Garuda Indonesia (Persero) Tbk). In 4th International Conference on Management,
Economics and Business (ICMEB 2019) (pp. 28-36). Atlantis Press.
USMAN, N., ANDRIYANI, L. and PAMBUKO, Z.B., 2019. Productivity of Islamic Banks in
Indonesia: Social funds versus financial funds. The Journal of Asian Finance,
Economics, and Business, 6(3), pp.115-122.
Weresa, M.A., 2019. Technological competitiveness of the EU member states in the era of the
fourth industrial revolution. Economics and Business Review, 5(3), pp.50-71.