Economics for Business: Impact of Inputs, Costs, and Perfect Competition on Supply - Desklib

ECONOMICS FOR
BUSINESS
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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
When and why do inputs and costs impact the production decisions related to the supply of
goods and services? Explain these economic concept using examples from within the UK
economy between 2010 and 2019...............................................................................................3
TASK 2............................................................................................................................................6
Defining & explaining how perfect competition or a highly competitive markets impact the
supply of goods and services? Explain these economic concepts applied to a specific highly
competitive UK based industry between 2010 and 2019............................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
The term economics refers to a branch of study that helps in understanding different
aspects of consumption, production, demand and supply and many others. The business
economics deals with the decision making related to market, organisational finance or the certain
environmental concerns which a company faces during its business conduct (Krugman & Wells,
2020). It also mentioned about the scarcity of resources, distribution or the factors of production.
The present report talks about the impact of input & cost that a company's production department
while making any decision in relation to the products & services supply. Also, further the report
includes the impact of perfect competition upon the supply. Both the concepts are being provided
support through an example of Unilever company that comes under the category of
manufacturing industry of UK for the period of 2010-2019.
TASK 1
When and why do inputs and costs impact the production decisions related to the supply of
goods and services? Explain these economic concept using examples from within the UK
economy between 2010 and 2019
The impact of inputs and cost upon the production decision in relation to supply of goods
& services could be possible due to change in any of the following factor:
 Input Prices: The prices of materials which are being used as an input is the most
important factor as mentioned in the Law of Supply. The factor says that the minimum
price at which the firm is able to sell its goods or services without experiencing any loss
then such rate or amount is considered as cost of production. When the prices for any of
the input factor raises more than existing then this would leads to an increase in cost of
production which will ultimately be sold at higher prices in market. This results into a
downfall in company's supply and vice versa (Young, 2021).
 Technology & capacity: With the change in technology with time a company generally
use to either increase or decrease their production capacity. A situation where the
company or market has an availability of goods or services with overcapacity then this
would increase the market's supply and in this case the company is ready to sell higher
quantity of goods at same prices and this will demand for greater inputs which a
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company will buy at lesser price due to bulk purchase. On the other hand when the goods
are being produced with higher capacity then it would allow business to attain economies
of scale which has a potential to reduce various costs.
 Factors of production: The different factors of production includes land, labour, capital
and entrepreneurship. If these factors are available with ease and in abundance then the
company would have its inputs in matching to the demand which can help them to
produce effective goods. If there is an scarcity of resources then they will be available at
higher prices which will eventually increase the selling price of goods and services. And
a higher price leads to fall in demand therefore company would not be able to supply its
products effectively.
 Market trends: In case the company is able to understand and determine the market
trends which are highly preferred by the customer's and company adopts the same. Then
this would lead to the production of such goods which can be purchased by the
customer's in market. Going with current market trend can lead company to have
effective supply of its goods and services. On the other hand, if the business has not
considered the current market trend into their production decision then they will not be
able to make their supply.
The decision related to the production of goods and services implies the decision making
by a producer of such goods & services within the market. The decisions in a company related to
the manufacturing of items is being taken after considering various factors like demand and
supply, market competition, cost of product, availability of substitute and complementary goods,
etc. The concept of production decision for a supply of product or service includes a connection
among the commodity price as well as the price of factors of production. Lower the prices of
factors greater the profit margin of company so a company would take its decisions in a way that
provides less cost to them. The production decision for a supply of goods and services also
depends upon the marginal cost and marginal revenue that is being associated with the product.
The situation when businesses use to have certain business decisions then at that time
they use to analyse & figure out several factors. The factors like how much & what kind of cost
or inputs are being required as an essential part of the product or service. Here in this case, a
business is required to decide the amount of labour that will be needed for specific quantity of
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