Economics for Business: Analyzing Demand, Monopoly, and Globalization

This essay provides an analysis of key economic concepts relevant to business. It begins by examining price elasticity of demand and supply, using Mark & Spencer as a case study, and discusses factors influencing demand elasticity such as product substitutes, necessities, product life cycle, buying behavior, and value creation. The essay then explores the implications of monopoly market structures, highlighting characteristics like high barriers to entry, single sellers, price makers, and economies of scale, using examples such as railways and Google. Furthermore, the impact of inflation and unemployment on businesses is described, along with the effectiveness of monetary policy in controlling them. Finally, the advantages and disadvantages of globalization, including infrastructure development and competitive advantage, are discussed. Desklib offers a wealth of resources, including similar solved assignments and past papers, to support students in their academic endeavors.

ECONOMICS FOR
BUSINESS – DECEMBER
2021

TABLE OF CONTENT
MAIN BODY...................................................................................................................................3
Price elasticity of demand and price elasticity of supply.............................................................3
"Monopoly will always result in a higher price and lower output than a competitive Market
structure........................................................................................................................................5
Using examples, describing the impact of both inflation and unemployment on businesses and
the effectiveness of monetary policy in controlling them both....................................................7
Effectiveness of monetary policy in controlling the inflation and employment..........................8
Advantages and disadvantages of Globalization.........................................................................9
REFERENCES..............................................................................................................................13

MAIN BODY.
Price elasticity of demand and price elasticity of supply
Price elasticity of demand: this includes the quantity demand and supplied of a good of a
organization which they provide to their customer and price elasticity of demand basically is
evaluation which considered as consumption of a production for the change in the price of the
product of Mark and Spencer.
Price elasticity of supply: price elasticity of supply include the measurement and
responsiveness by which the supply of goods and services provided by the Mark and Spencer
and change in their market price. Basically the supply of a product increase in provide factor of
the product and when the supply decrease therefore the price will also decrease.
For the organization these both are the essential but for the better option for Mark and Spencer
the price of elasticity of demand is most considerable (Bryan, Ye, and Connor, 2018).
The M&S product are highly priced sensitive and therefore the demand is price elastic in the
organization. Thus, the hike in the price of the product of organization and decrease in the
demand of the product that organization sell therefore the company has a lot of substitutes
available in the market they have to maintain their price and this will results in the reducti8on in
the home take pay of the many people. Mark and Spencer is a British company based in London
founded in 1884. The business involve in the dressing, retailing, and food sector. In this project
we mainly discussed the M&S women apparel that a company owned and designed. Today the
market cap of the M&S all over the globe is $2.3 billion. This company is one the best UK
brand. Who deliver premium product to their customer and the quality of the product is also
good. Company only focus on the luxury product by which they attract the customers. Company
going through a lot of hurdles by which they handle all of this and make their position in the
market. The value of the product that company sell has not changed over the year it just they will
work more and hard to gain more customer.
The formula which uses in the price elasticity of the demand of the product includes PE=
CHANGE IN QUANTITY OF DEMAND/ CHANGE IN PRICE.

For example M&S sale the frozen vegetable in their food store this includes the elastic demand
and yet the consumer won't buy the frozen vegetables for the very long period that's why the
organization has also developed a normal one by which they are able to go to the other option as
well.
Characteristics which include the price elasticity of demand for the organization.
Product substitute: the product substitute include the alternatives of the product that
organization sell. If the price of the competitor product will increase therefore the demand of the
company product already increases because of the other product hike (Guerrero-López, Unar-
Munguía, and Colchero, 2017).
Necessities: as the organization has a lot of supply chain in clothing, home appliances, etc.
therefore they have to maintain and make the customer make their need. From example a
organization deals in a home appliance as well. They should have to make the demand in the
home appliances for them in order to increase their sales. And make the customer buy the
product regularly from the organization.
Product life cycle: This stage plays the mandatory role in the elasticity of demand in the market.
This concept ensures the availability of products in the market and assures the effective prices of
the products. The product life cycle performs all those necessary steps that are required in order
to match the demand supply ratio in the market. And product life cycle is also the essential in the
elasticity of the demand because M&S create the demand of the product by make an awareness
about that they the product is in the market are not for too long therefore by this the customer
will attract and attract towards the company to buy that product because of the life cycle they
think that it will be gone soon from the market. The company come up with this for the better
demand and sell of their product.
Buying behaviour: buying behaviour of the price elasticity demand of the M&S determine the
customer base which analyse the loyal customer that they will surely buy the product that
company produce at any price this analyses the productivity and consumer addiction towards the
company (Amini, and et.al 2019). This element plays the mandatory role in increasing and
decreasing the demand for the products. This involves the proper study of the consumer
behaviour. So, the different aspects of the consumer can be understood and the buyers can be
sustained for longer period.

Value creation: this includes the performing activity of the organization and activities by which
they analyse the value of the organization and create value among the customers. Activities of
identify the value chain by which organization create their own value by their activity. To
achieve the competitive advantage organization put their best efforts and strategic them well and
analyse the elasticity of demand. This concept plays an important role in attracting the customers
for the company. The value creation refers to creating the unique value in the products and
services so, the customers can get attracted towards the products and services of the company.
Performing this element results in increasing the unique value of the products. And along with
this, it further ensures the effectiveness in goods and services.
"Monopoly will always result in a higher price and lower output than a competitive Market
structure.
The Monopoly in the market refers to that situation under which the specific commodities has
been supplied by the specific firm and the firm has the full control over price. The monopoly
structure ensures the organization over-all right in terms of increasing and decreasing the prices.
The monopoly form of market always results in increasing the prices of the output and this is
because as the single firm has that specific commodity which is required by the number of
buyers. Monopoly identifies the industry factor which has the dominant position in the market
and those do not have any competitor which leads towards the higher price and lower output for
example; railways and google. These are the single company who has monopoly all over the
industry and these type of company can be developed by the government or the private sector or
may be semi- government. Basically monopoly stands in an absence of the competition and leads
towards the high cost for consumers and give the inferior product and services to the customer as
well. In order to understand this concept with clearance here is the complete description of the
monopoly structure:
Monopoly has types which analyse the advantages and no competition in the market for the
product or services they provide.
High barriers of entry: even though if anyone wants to compete with the monopo0ly firms they
cannot because there are high barriers of entry in the market. For example; GOOGLE they have
a lot of competitors try to enter into the market, but they cannot because the market base and
customer base of the organization is the major, and they have to fight a lot in order to gain the
google customer people often used to it in order to create the more market all over the globe.

That's why those companies who are in the monopoly market has the dominant position like,
google has in the market (Durand, and Milberg, 2020). The feature of high barrier entrance in the
market provides certain benefits to the monopoly firm. As the different firms cannot compete
with the monopoly firms as they have that products and services that are specified for that
particular firm only. The monopoly firm has no fear in relation of new entrance in the market.
Single seller: this factor determines the factor that in the market there are only one single market
where they are the only who sell the product or services in the market, and they have no other
competitor. This feature provides all the copyright to the seller. As the seller in the single seller
and does not has to face any type of competition in the market. The seller enjoys all the rights of
earning the profit and fluctuates the prices according to their own perceptions.
Price maker: the price maker which enables that the monopoly company can demand the price
whatever the price they want because there is no competitor in the market available. Company
increase the price without of having risk of the competitor and competition in the market. As the
firm has the no competition in the market in results in empowering them with the tag of price
maker. The firm itself sets the prices of the products.
Economies of scale: this includes the huge quantities of the material which include in the
company because they are the monopoly companies in the market. Monopoly company require a
lot of raw resource which they buy in the bulk therefore the small firm can;'t survive because of
this because they take the large amount of the raw resources or material in the volume discount
example; Walmart company.
 Sources of the monopoly power which includes the factor which is given below;
 Increasing in the return scale of the production or services in the organization.
 Production also require the control over the natural resources of the organization.
 For the monopoly business the network and increase in the value of the product also
increase which identify the presence of the company in the market. The value of the
products in the market increases as the products has the unique value and provided by the
one firm only. This results in gaining the more customers towards the unique value of the
products.
Development of infrastructure: this indicates the advancement in the technology by the trade in
the globe where the country also get the benefit and make the country more improve by the
globalization. Trade throughout the various country indicates the country improvement and

manage the development in this. Development of infrastructure gives the country all necessities
and improve in order to make the living standard up of the country people and enhance their
ability his will also help the country and globe in their economic growth (Zeuthen,2018).
Competitive advantage : Competitive advantage analysable the resources and capabilities of the
organization which help the organization to create the value and lower their cost structure event
make differentiate product from the competitors of the organization. This includes the resources
and capabilities of the organization to achieve the low cost structure with differentiate product.
Through the choice of the price of the product by the company they choose their position in the
market as the many company higher their product price as compare to their competitors they
have analysed the factor by which they will make recognition in the market.
Competitive market structure this indicates the structure of the different market and comparison
of the different market.
Using examples, describing the impact of both inflation and unemployment on businesses and
the effectiveness of monetary policy in controlling them both.
In every department, a positive and stable relationship between the inflation and unemployment
creates a set of challenges. The term inflation refers as the difference between the demand and
supply of goods and services. It is totally depends on the business demands as when the demand
has been increased then the production of the goods or services have to exceed and also increases
the price level(Balakrishnan, and Parameswaran, 2021). On other hand, according to the
economic concept when unemployment rates fall then the inflation rates rises up. Let's
understand this by taking the example of Philips curve. The concept behind this curve is to
demonstrate the modification in unemployment within an economy and which effects on the
price inflation in a business environment. The Philips curve stated that when the unemployment
and inflation are reciprocally related the unemployment decrease and inflation increases while on
other side when high unemployment rates takes place then the inflation rates are at low level.
Hence, it s not linear and graphically the short tun curve has been made as L-shape when the rate
of unemployment is relied on the x-axis and inflation on y-axis. In general, when the business
organization unemployment rates are lower, then the rate of inflation will rise up.
Positive Impact:

Higher profits : In organization, they can obtain the higher profit by keeping the prices of the
products at high level because of valid inflation. They can experience the better profit with the
decrease of unemployment(Needham, 2020).
Investment returns : Businessman and entrepreneur took the advantage of the inflation by
receiving and adding the incentives which can be utilized in the productive activities. As the
higher investment then the producers can achieve the right investments and can manufacture the
more goods and services and results in betters returns.
Negative Impact:
Fixed income : In this factor, when unemployment takes the place at higher level then it creates a
risk of low inflation. However, a fixed income of the human who belonging to the fixed income
structure like salaries individuals, they will have a loss of income because the purchasing power
will also reduce.
Inequality while income distribution : In general, the inequality while distributing the income
causes the disturbance mostly because of fixed income rates.
The inflation and unemployment both has the positive and negative aspect on the business. The
business enjoys the benefit of higher profit in the economy and also the effective investment on
the return has been enjoyed by the company. On the other hand, the fixed income rates results in
creating the situation of inequality while distributing the incomes. And this results in reducing
the purchasing power of the people in the economy.
Effectiveness of monetary policy in controlling the inflation and employment
Monetary policy is the law of modification of the interest rates in the basic manner. The
monetary authority of a nation have to adopt this policy to control their interest rates as
borrowing from the banks for short term requirements to reduce the inflation which will confirm
the price order. There are three major inventions from which monetary policy can control the
inflation and unemployment. Implementation of the monetary policy results in increasing and
decreasing the interest rate in the market. This controls the level of the cash flow in the economy
and this results in setting the standard purchasing power in the market. And this further result in
implementation of the efficient level of inflow and outflow of the cash in the economy.
Management of accounting entry : This factor is the major and important monetary objective.
The central bank of the country maintains the quality and quantity to control credit through the
various methods and theories. Applying this, it increases the bank rates, sells securities in the

open market and numerous of credit control measures(Ojo, 2021). The monetary policy can be
effective in inflation when the demand pull factors. Proper management of entries can be
effective to the company to controlling the unemployment and inflation as well.
Demonetization : The term demonetization means the change of currency or economy to the
particular nation. These measures have been applied by the government when a number of black
money collection is increasing in the nation or country. This concept effects the huge change or
modification in the inflation of the all the business of the country. Because of this, the number of
unemployment rates can be controlled and can give opportunities in the future and stable the
unemployment. This regulation of the government ensures the proper cash flow in the market.
The large number of black money in the market works as the barrier in the growth process of the
economy. This concept provides an assurance of solving the barrier and ensures the smooth flow
of cash in the economy.
Issue of new currency : This factor has been defined as the most extreme monetary policy
measure which creates an issue of new currency instead of old one. In this system, the new notes
and currency has to be changed from the new one to have a valued and useful economy structure.
The new notes have been already kept by the banks accordingly, The small or big entrepreneur
or organization have to exchange the money which they supposed to have. A great inflation of
the rates of the demands and unemployment can be decreased and increased but after some time
it can be balanced and control the excessive usage of movements and rates. Thus, these are the
major three strategies from which monetary policy can supply effectiveness in controlling the
rising prices.
Advantages and disadvantages of Globalization
Globalization indicates the economy of the open market of the competition of the organization.
Thus, this indicates the interaction of the production, trading and financial transaction of the
industries in the globe for the betterment of the economy.
Advantage and disadvantage of the globalization
Transfer of technology: this indicates the production of the product that distribute across the
globe and implemented the technology in every region wherever the product is distributed. The
transfer of the technology by also in various forms such as through the communication and this
will take the minimal cost and less time (Somjai, 2017).

Better services: this includes the globalization provides better services and technology
advancement in order to sustain the global market and crate a better position in it. The
technology is transfer and expand in the global like; water supply through in country to another,
mobile networking that is international. Nowadays this is very essay to communicate and start a
business in every everywhere that organization want to start their business which enables the
globalization and expand the business and their market base.
Standardization of living: this globalization also increase in the standard of living of the people
where they want to increase and enhance their lifestyle in orders making reorganizationist the
market. Integration of economies is the key process of the globalization and enables the country
against the poverty to make their lives better. Whenever country open up their trade as the global
therefore their company get the benefits and the people who live in the country get benefits
because of the international trading.
Foreign exchange reserve: this indicates the improvement in the Foreign exchange reserve and
build an international financial flow which helps the country itself.
Economic growth:this indicates the utilization of the resource in order to enhance the surplus
resources and the resources which export outside the country in order to enhance the economic
growth of the country. The technology accesses the deficit resources where the procured and
interest the economic growth of the country for the better benefits of the companies in the
country.
Affordable products: the affordable products indicates the reasonable price because of the4
advance of the technology and the resources are getting better buy this and make the standard
and living better life. Globalization promotes the competition of the domestic economy of the
country and compete against the competition and reduce the competitors and penetration pricing
strategy.
GDP Growth rate: globalization contribute towards the GDP growth of the world and enhance
the growth as well (Pérez-López, and Mir, 2021). The concept of globalization opens up the
growth platform for the different countries in order to get engage and experience the
development. This ensures the large number of production in terms of goods and services. This
further ensures the higher profit and this leads to make the direct contribution in the GDP of the
nation.

Extension of the market: globalization indicates towards enhance of the market of the country
because of the country market and export where the globalization held because this enhances the
ability and make the market of the country improve and increase in the demand and supply of the
country market because of the globalization.
Disadvantage of globalization
Growing inequality : this indicates the inequality as well because the trade needs the
specialization and management properly those who are lack in this get the inequality in growing
the globalization and lagging.
Increasing unemployment rate: globalization increase the unemployment rate because it
demands the high rate of skills and management by which this includes the cheaper price which
indicates towards the unemployment.
Trade imbalance: this refers the vales and import and export of the country trade of the which
also indicates towards the imbalance.
Environmental loss: increase in the industry indicates the environment loss of the country also
because of the foreign evolvement in the country and their enactment because of this.
In 2021, it is the first year when the three main economies of the world United states, Euro-pion
union and China has focus and put the efforts against the climatic disaster Covid19. Due to this,
a great impact on the economy of the country has to suffer. The conference board forecasts that
real GDP growth will rise to 5.0% in 2021, and the annual growth will have in 5.5% at the over
of the year and it has been predicted that by 2022 the percentages will be increase with the
difference of 2.9% and at last to 2023(Hallward-Driemeier, and Nayyar, 2017). According to the
above report, the change in globalization has been predicted that in the future times, the
transportation of the goods and products will be lead in the easy form as the global market is
increasing rapidly regarding the exportations. In this era, it is successful in the transportation but
in the nearby future the changing of goods and services will be at the best position due to
increase and improvement in the sources and even technology will be helpful in the
transportation. As the transportation will increase it will require the employee to maintain it and
which will also create an increase in the employability and provide various opportunities to an
individual. As the number of employability increase it will be beneficial for the entire
universe(Boldyrieva, Kharchenko, and Chaikina, 2017). Along with this, the global market will

have the rapid improvement in the development of the economy and share values which will
build a comfortable and sustainable growth at the surrounding.