Understanding Supply and Demand Equilibrium

This assignment delves into the fundamental concept of supply and demand equilibrium in economics. It provides a comprehensive overview of the topic, including the definitions of supply and demand, the law of supply and demand, and how they interact to establish market equilibrium. The assignment also examines factors that affect supply and demand, such as changes in consumer preferences, technological advancements, government policies, and external events like wars or pandemics. It discusses the importance of analyzing shifts in supply and demand curves to understand market trends and make informed decisions. With a focus on real-world applications, this assignment is ideal for students of economics, business, and finance who want to develop a deeper understanding of market dynamics.

ECONOMICS FOR
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analysing demand and supply to identify the main factors influencing the price of polo mints
.....................................................................................................................................................1
CONCLUSION..............................................................................................................................11
REFERENCE ................................................................................................................................12

INTRODUCTION
The word economics determines the demand and supply of products and services and if it
relates to business than it analyse the buying and selling of goods and services to the consumers
at the market price. Economics for business theory is based on shifts in demand and supply in
market, monopoly competition in the market, cost function and production cost which changes
the business criteria to engage in dealing the goods and services in the market. Present report is
based on Polo mints which is a brand name of breath mint whose main tag line is hole in the
middle. Its Is first manufactured in UK by the employee John Bargewell at Rowntree's factory
and its was founded in 1948 with the variety of flavours in mints. Rowntree and Nestle come up
with this concept to introduce original taste of peppermint.
Report will include the factors determining the price of polo mint by analysing its
demand and supply curve theory.
TASK 1
Analysing demand and supply to identify the main factors influencing the price of polo mints
Due to encouraging a successful product in the market by nestle company they also
introduce various products or flavours of polo mint by increasing the taste and followers of the
polo mint. Due to increase in demand the company also change their strategy regarding the
productivity of the product (Baumeister and Hamilton, 2017). Demand means that the need of
buyer which they are expecting to increase the production of the company and supply mean the
supply of goods and services when demand are increased in the market relating to that product.
For promoting the business of polo mint the nestle company check the scarcity of the
people and their product in the market relating to their demand and needs which re unlimited but
they have the limited resources to produce and manufacture the product. The major economic
problem in the market is the scarcity of the demand and supply (Gillespie, 2013). While dealing
in manufacture process there are various efficiency arise which company has to deal with to
arrange the continuous flow of production such as productive efficiency which depends on the
demand in the market if there is no demand the company not produce the product. Allocative
efficiency means to utilise the optimum resources allotted to the company to produce the
product. Pareto efficiency means when there is only single product and everyone loves that
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product which result in high demand in market, this result of encoring the product and chasing
the competitors to beat that(Demand, 2019)
Illustration 1: Demand
Source:- Demand, 2019
This diagram shows the capital goods and food relevant to each other in the company
manufacturing and market procedure.
There are various factors which reflect the demand and supply in market as it can be
micro or macro factors. Micro factors such as individual takes their own decision to enter into
the market and bring their own prices which result in profit maximization to the company and
also they can closely interact with the market regarding the demand for the product and the
macro factors such as growth in the economy, Inflation rates and unemployment are the major
factors which affects the polo mint the demand and supply structure (Dillig, Jung and Karl,
2016).
In Relation to Demand
INCOME: This help to analysis the income of the people as if company is engaging more
products in the Market and customers have no money to spent on that product that it reflect the
demand of the product. As if income is high than product demand is also high in the market.
Customers mostly prefer the product with the best quality and at reasonable price so if company
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is producing polo mints with less quality and at low price the demand of the customers is
increased.
Prices plays an important role in the demand and supply as demand increase the prices also
increased, as demand slows down the prices remain constant or may be decreased as company
has to sell the product similarly when supply is high prices are also high when supply is low the
prices remain constant. There are various factors which analyse the market demand and supply
curve(Demand, Supply and Market equilibrium, 2019).
Monopolistic competition: There is typical competition in the market. As buyers and sellers
enter into the market to face the competition with the competitors but the market is expanded in
vase area and similar products are launched in the market with the same use. This face huge
problems to select the right product but competitors promote their product to be on the top
priority to the buyers by their they change their company norms by dealing or supplying more
products with low quantity and at affordable price which attract the customers and promote their
business. Due to tough competition there are many barriers for other company to enter into the
market and promote their product. This reflect the supply curve as large number of competitors
enter into the market which result in large supply of goods and services. Its implication is firm
facing a downward slopping demand curve (Cardenas, Franco and Dyner, 2016).
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Illustration 2: Demand, Supply and Market
Source:- Demand, supply and market, 2019

As Nestle company the owner of polo mint had taken a trade mark of not copying its
design so that no such competition arises but customers loving this product which result in huge
demand in the market.
POPULATION: Market structure works with the demand in the market and also affects through
population. If the company produce more product and there are low population that it results in
lack of importance of product. As demand increases on increase in population and also the
products which they love the most and spend their earning on that product.
Oligopoly: In these sellers enter into the market but its tough for them to maintain their dignity
In the market. For single product lot of manufactures are dealing in the same taste of product
which relates to high competition in the market. Firms are independent and they differentiate the
products and prices individually. In this industry they dominant each others and other follow the
advantage to promote their product (Donier and Bouchaud, 2016).
Changes in Demand and Supply results to impact on prices of polo mint: Polo mint is usually got
affected by the demand and supply of the products but its prices are constant on certain
circumstances. As few cases are here which describe the impact of demand and supply on prices.
 When the demand increases prices are also increased: Polo mint maintains a
monopoly in the market as there demand are always increased which result in increase in
prices and also the quantity also increased as demand in products means more production
which results in more quantity of goods produced and which result in more resources
utilised to establish a product (Aalami, Moghaddam and Yousefi, 2015).
The impact on prices through which the demand increase is that when demand raise for
polo mint product this result to more productivity of the product which result in more resources
used to develop a product and also other raw material spent to manufacture a product their result
to increase in price is high for the product and also it charges more labour. When the demand is
high it involves cost factors as it charges more labour, more machines to produce the product,
more resources to finish the product and then packing and labelling cost is also high (Demand,
2019).
OBJECTIVE: Company usually produce the product with good and positive objective that
customers love their products and this product will be on the top priorities among the buyers. But
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the taste of customers not retain permanent they always demand new and innovative product
which can bring new taste to that product. This result in brining more demand to the new product
and company had to engage and built new taste among the customers which results in increases
the price and demand for the product.
Illustration 3: Demand
Source:- Demand, 2019
 When demand decreases prices also decrease: When the product has no demand in the
Market which arises when the customers gets bored to use the similar product every time
they want some new product in the market that's why the usage of the product is low
which result to less demand in the market. With the less demand it reflects the prices of
the product. As when there is no demand in the market company sell the product at low
price so that no wastage occurs to the company and company can run on the basis of no
profit or no loss to that product. But due to less demand of product the productivity is
also less which result in decrease in quantity because customers are not demanding the
product and also the company suffer loss for decrease in productivity (Rintamäki,
Siddiqui and Salo, 2017).
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The impact on decrease the prices is that company had to stop their production
department to produce the product as demand is less in market and customers want new product
or new taste in polo mint product (Shifts in Demand, 2019)
Illustration 4: Shifts In Demand
Source:- Shifts in Demand, 2019
IN RELATION TO SUPPLY ~
LABOUR: Supply increases with the cost of labour. As if the supply in the market is stopped
than it results in the company to bear losses. AS if labour is not present at work than the product
are not delivered timely which results in slow supply or affects the supply criteria. Supply of
products depends upon the hard working of the labour. If supply is high it results in more
efficient work committed by labour similarly is labour stops the work supply rate is decreased in
the market.
 When Supply increase prices decrease: When the supply increases due to increase in
market demand for the product which result in bulk order of the polo mint In that case
company increase the productivity and supply the product at lower price to attract the
buyer to purchase more and company in return gain profits by having lot of productivity
and also resources are used at optimum level. If company buys raw material at bulk level
the supplier deliver time at less price with high discounts on prices which results to
increase the growth rate of the company (Fang and et.al., 2016).
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The impact on prices is that it gives the chances of change in inflation rates in the
economy market. Due to changes in rates company can some or the other reflect the productivity
of the company (What factors change supply?, 2019).
Illustration 5: What factors change supply?
Source:- What factors change supply?, 2019
RESOURCES: Supply increase where there is easy availability of resources in the global
market. Market is vast expanded and lot of challenges are established in the market whether it
may be dealing through raw material or changes in price. Due to increase in supply resources are
more utilized and that's the result of increase in prices. Similarly, when the resources are
available easily than it result to increase in supply which results in gaining more profits to the
company at lower rates.
 When supply decrease prices increased: When the supply of the polo mint decrease
due to less resources available, this result in loss to the company structure and planning
procedure as they buy the resources which increasing their value which result to increase
in price of the product. AS there is so supply of product but still it has some demand
company fulfil it by utilizing extra resources in the product and deliver them with high
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price. As the productivity and the delivery charges of the product increase the price and
cost of the product also increase which analysis the company to handle more issue and
estimate their budget according to the supply of the product (Daraeepour and et.al.,
2016).
The impact on prices of polo mint is that supply delver less polo mint in the market
which results in high demand and customers prefer to buy products at high price which result in
less dealing in supplying activity but also less quantity of the product.
GOVERNMENT REGULATIONS: Changes in norms in every country affect the supply of
product as to deliver the products in the global market every country has their own policies of
importing and exporting the products and services which affect the supply structure. AS if
company deliver the product at largely or densely populated are where government had strict
norms regarding the taxes on import and export of product that there will be increase in price as
the product includes the tax rates as well.
 Equilibrium prices: The prices where the demand and supply are equal at the same point
is said to be equilibrium or equal pricing. Whether the demand is high or low or supply
increase or decrease the prices remain constant and is not reflected by the company
productive structure (Steinwender, 2018).
The impact on prices is that company can't gain any profit and loss in any of the services
and delivery of goods and services in the market (Supply and demand Equilibrium, 2019).
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Illustration 6: Supply and Demand Equilibrium
Source:- Supply and demand Equilibrium, 2019
Elasticity also plays an important role in demand and supply chain as also had great
impact on prices as the taste of consumers are not fixed they are constantly changing due to
changes occurs in the polo mint product the consumers also demand changes in the product. The
Nestle company keep this strategy to maintain the company reputation by proving the polo mint
in different flavours. They implement the techniques as people love the design of polo mint the
only thing that they demand different flavours in the product which the company produce by
proving them different flavours of peppermint in polo wrapper only (Vandewalle, Bruninx and
D’haeseleer, 2015).
It influences when individual, suppliers and consumers change their demand for the
products and company invest into that product according to the demand raised in the market
which result in losses to the company.
Shifts in both Demand and Supply curve:
The shifts in demand and supply curve arise when the polo mint company changes the working
criteria of the company which reflects the consumer demand and also productivity of the
company. There are following situations which reflect the curve in demand and supply of the
polo mint product (Salisu and et.al., 2017).
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~ Maturity Level: In these customers usually get bored while using the same products and same
brand, they always demand new product or new taste which can develop the sign of refreshment
in their routine life. Polo mint product take the place in customers heart but as the changes in
environment customers are not fixed to the single product. For this changing product company
had to innovate new strategy to stick to customers satisfaction level so that they are the
permanent customers of that product by which nestle company developed or tasted new product
for refreshments and the product some or other reaches the customer satisfaction level and which
give rise to demand in the product (Aalami, Moghaddam and Yousefi, 2015).
Demand in product give result in rise of prices and quantity as to establish new product
new resources are used and also different techniques are implemented so that it can differentiate
with previous product and new strategies are used to promote the product so that it attract the
customers and their interest in the product (Fang and et.al., 2016).
~ Substitute product: Company usually innovate two to three products together which the
customers get confused to prefer the best product in the market and due to that changes in the
company other competitors take the advantage and they bring the best product in the market
which can beat the previous product reputation this reflect the substitute products in the market
(Steinwender, 2018). Customers always prefer the products with the best quality and affordable
price, they usually not care of the products as they think that they are of same use but the matter
is which is most cheap and had more quantity. They compare the both prices and then select the
best one with low price.
This result in having huge demand of the product which the customers prefers and the
previous product losses its identity and that result to stoppage of supply (Baumeister and
Hamilton, 2017). Polo mint is usually preferred by everyone that is no age factor that youth like
it most of added as it is a refreshment purpose and every age people loves this product but due to
no changes or innovation in their product customers get bored and shifted their interest in some
other product this result in lack of company brand name as polo mint is famous for its design and
the customers usually prefer tic Tac against the polo mint because they are easily affordable and
also produce lot of quantity in that packet. Company faces lot of challenges in standing up that
product and making reputation in the market but they bring the new taste in polo mint to attract
the customers and they put the flavours of their taste so that customers first preference is top
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select the polo mint product and adopted their fits choice in peppermint products (Shifts in
market supply, 2018).
Illustration 7: Shifts in market Supply
Source:- Shifts in market, supply and Demand, 2018
To maintain a continuous supply of chain for demand and supply, Nestle company has to
recommend their product in the different style and also use some different sources to promote the
product in the Market and customers are usually connected to social sites and attract through
marketing strategies (Salisu and et.al., 2017). Company uses innovative and creative method to
attract the customers so that there demand and supply for the product remain at the equilibrium
levels and they both balance their working structure, so that no result of unemployment arise and
the company product is not reflected by the exchange rates and inflation rate in the developing
and emerging market (Dillig, Jung and Karl, 2016).
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CONCLUSION
From the above study it can be concluded that Economy plays an important role in business to
examine the facts relating to the products in the market and also how the supply and demand of
product influence the polo mint product in the market. As Nestle company announce polo mint
product in 1948 with the tag line of the mint with the hole. To encourage the followers of the
product it launches the product with few more flavours such as orange, lemon, fruits flavours
which attract the customers at high level. Customers usefully attract with the product and after
launching its flavours the company analyse the smooth running of demand and supply of the
product and also balance their prices with that product and also various demand and supply
curves which influence the prices of the product in the market.
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