Economics for Business Assignment Solved - Polo mint UK

Added on - 06 Jan 2021

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ECONOMICS FORBUSINESS
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1Relationship between supply, demand and price........................................................................1Explaining equilibrium using supply and demand diagram........................................................3Explaining what results in change in demand.............................................................................7Explaining reason behind change in supply...............................................................................8Impact of change in supply and demand over price of product..................................................8CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONEconomics for business refers to a brief study of various factors of the economicenvironment. It is a quantitative method of analysing overall business of the firm along withvarious factors that leads in diversifying the overall structurePolo mint UK. In the presentassignment, a description of demand and supply and gaining equilibrium through it has beenincluded. Reasons behind change in demand and supply are also been explained. Further, thestudy 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 indemand and supply over price.MAIN BODYRelationship between supply, demand and priceDemandThe term demand refers to the amount of goods and services that customers wants topurchase at a certain price (Grossman, 2017). It shows the desire of customers of market to buy aspecific product or services in the competitive market.As per analysing the operational scenarioof Polo mint UK on which if professional pauses a stable price over the product which will bringthem effective demand.SupplySupply can be defined as a quantity of products or services served by the companies inmarket for the purpose of fulfilling demands and needs of customersof Polo mint UK.Relationship between demand, supply and priceFor the purpose of analysing relationship between these three element, it is necessary tounderstand the law of demand and law of supply as well.Law of demandAs per the law of demand, if all the factor remains same except the price, demand ofproduct would be changed. There is aninverse relationbetween demand and price of theproduct or services. Therefore, if the price ofPolo mint UKrises in the market, it would result indecreasing the demand, as customers would be substituted towards other products having lowerprice.1
On the other hand, in case price of product reduces it would lead in attracting customerstowardsPolo mint UK’sproduct, through which its demand would be risen in the market. Boththe conditions results in shifting of demand curve.Law of supplyLaw of supply states that if price of product changes and all other factors remainunchanged, it would result in changing the quantity of supply in the market. Further, as per thislaw, there isdirect relationbetween price and quantity of supply. In case, the price of productrises, with a view to increase the profitability of business, company would increase the quantityof supply in market.Whereas, at the time of reduction in price of product or services,Polo mintwould waitfor increase the price of product, as selling product or services would result in reducingprofitability of product. In this regard, increase in price would result decreasing the supplyquantity of product in equal ratio.2Illustration1: effect of price of demand curve(source: Economics Basics: Supply and Demand,2019)
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