Economics for Business: Impact of Inputs, Costs, and Perfect Competition Market on Supply of Goods and Services in UK

This report discusses the impact of inputs and costs on the supply of goods and services in the UK, along with the role of perfect competition market in the manufacturing industry. It explains the production decisions and their impact on the economy. The report also provides insights into the manufacturing industry of the UK and how it contributes to the GDP. The study material is a part of Desklib's Economics for Business course.

Economics for
Business

Table of Content
INTRODUCTION.........................................................................................................................4
TASK..............................................................................................................................................4
Why inputs and costs impact the supply of goods and services in terms of production
decisions......................................................................................................................................4
Explain the perfect competition market and how it impact the supply of goods and services by
applying in any UK based industry.............................................................................................7
CONCLUSION..............................................................................................................................8
REFERENCES............................................................................................................................14

INTRODUCTION
Economics is the study of scarcity and also its usability of the resources, production of
products and services and the welfare over time for the achievement of the business goals. It
evaluates the production and sent in the market fr their potential customers(Sharma, C., 2021).
Suppliers needs to be undated with the use of advanced technology so that they can develop the
major consideration in the market and the current trends of the place. This report will cover the
costs and inputs that are essential for the supply of the mechanise wit the help of UK economy.
The impact of the production decision on the supply of products and services with the help of
economic conditions of UK. Lastly it will analyse the role of perfect competition and the certain
consideration which are having short run and long run market which is being defined and the
factors that is effecting the overall supply of goods and services in the manufacturing sector.
TASK
Why inputs and costs impact the supply of goods and services in terms of production decisions.
Supply is defined as the amount of products and services that are available to the
customers and basically supply of the goods is dependent on the demand of the target market. It
is the general concept as when the prices of the goods increases then the supply for the
commodity is also increases and if the given prices of the goods decreases then the overall
supply of the goods also decreases. It related and shows the positive relationship with the price
and the supply of the given commodity. There are various factors which leads to have the
increase in the prices of the products in the market that are raw material, labour cost etc. It
defines that how businessman can supply to its buyer and on what cost so that they can ensure
the high prices of the company in the large market.
Law of supply states that there is positive relationship between the price and the supply
of the goods and other factors remain constant. It shows the change in the prices of the
commodity with the change in the behaviour of the producer due to span of time and that is given
below:

The above graph is showing the positive relationship in the price and the quantity
supplied and shown in the above diagram. The graph is upward sloping as the price of the
product is was at P1 then they are offering the quantity supplied Q1 as increasing in the prices of
the goods leads leads to increase the supply of the products in the target market.
Input: It is the factors of production that are being divided in the four category that includes
land, capital, labour and the entrepreneurship. This also helps in offering products and services
that can be measured by the gross domestic product of the UK economy.
 Land: it is the organic resources that are available on the earth in which crops and the
office building. It also includes the oil, ocean, solar energy and coal in consideration to
renewable and non-renewable sources as taking the consideration of the UK economy.
 Capital: This is the amount of money or the resources which is used to make the
products and services that also includes the machinery, commercial building and the
factory cost etc.
 Entrepreneurship: It also defines the ability to take the uncertain risk that can occur the
supplying of the goods and services.
 Labour: It also related physical and the mental that is being utilised in offering the
products and services. Such products can be supplied on the basis of population, leaving f

work and the age attitude of the person. It is measured on the basis of products as the
person is producing during the time of their work.
Costs: It is the expenditure which is incurred by the individual to the service provider of the
products and services that also includes the raw material, labour charges and the manufacturing
costs and the overheads.
Production Decisions: It is the certain decision which is being taken by the individual for the
company and also benefits the firms as well as the buyers.
Impact on the production Decisions:
 Raw materials: It is the material that has be given within the set time frame as no delay
in such resources can be managed by the company. This also suffer the overall economy
and also leads to reduce the national income of the nation. For instance, United Kingdom
is facing the worst slum in the economy after a very long time in 2020 that is also
effected the overall flow of good and services within the economy and also suffered the
overall expenditure of the nation as well due to the unavailability of raw materials which
also reduces the overall export of the nation and they have to make the nation through
their huge looses.
 Labour charges: It is the decisions related to the supply of product and services to be
done on time by which can leads to increase the overall efficiency of the employees and
tends to gain the gross domestic product of the UK. As it shows the total production of
the goods which can be seen on time. It also enhance the living standard by increasing the
wages f the workers and decreasing the overall cost of the commodity. For instance,
When the prices of the goods tends to rise in manufacturing sector then it also impact the
GDP of the nation. It also having major impact on the UK economy in 2010 during
recession due to the unavailability of goods.
 Capital: This is the main consideration of the business and the supply of the capital
changes due to the span of time so all the decisions that are being taken related to the
supply of goods and services must be appropriate. Required infrastructure for the
betterment of the nation is in the hands of the government bodies. This can be due to the
mismanagement of the higher authorities and leads to delay the decision and have
negative influence in the economy of UK.

 Quantity of production: There is the direct impact of production decision as the labour
is not able to fulfilling the quantity that has to be supplied. It is stated that when the
quantity of the product unit is not fully manufactured then it cannot be supplied in the
large market which results in taking the major decision related to the supply(Di Vaio, A.
and et. al.,2020). For instance, in UK economy the production of the goods is same but
there is increase in the demand of the good which affect the overall condition of the
market and results in insufficient supply of the product and decrease their value and also
impact the overall economy of UK.
 Identifying trends: it is the leadership process which helps in knowing the current trends
of the market which also increase the supply of product and services at the right time. It
also enhance the overall opportunity for the nation which is contributing to the GDP of
UK open and contribute to the welfare of the country.
Explain the perfect competition market and how it impact the supply of goods and services by
applying in any UK based industry.
Perfect competition market in which homogeneous goods are being sold to the large
number of buyer and there is huge competition as there is no barrier in the entry and teh exit of
the firm. It is the serving partners as the natural is standardization in a position of the market
structuring. It is the formal assessment in which competitors are at their highest possibility level.
The value of the product is totally depend upon the homogeneous effects effect from the buyer
existence. It is also known as the hypothetical condition which is being set by the seller for
setting their prices according to their market rate.
According to the professor Marshall, perfect competition market is defined when the
similar product are being sold at a similar prices by the various firms over a specific period of
time.
Supply curve in the Perfect Competition:
The supply curve in perfect competition is lying above the minimum of the mean changeable
pricing and positioning of the marginal cost graph. It is the total of marginal revenue and cost
which shows the use of income in getting maximum revenue. There are certain terminologies
which can increase the profit maximization of any company that are total revenue and marginal
revenue and these are are having two concepts for showing the beneficial areas:
 Short-run Manufacturing Decision-making:

It is the the factor of production that is fixed in nature while the other factor is variable in that
time. This is a factor affect the the short run decision that includes shutdown procedure variable
costing and revenue(Farrukh, M. and et. al., 2020). The highly competitive marketplace in short
run supply curve is the marginal cost curve line above or at the shutdown point which also shows
the economic level of the manufacturing sector.
According to this graph, the short term supply curve in the perfect competition is the
line which is stay above or at the shutdown dot so this is in the profit generating situation. When
the companies having graph line below the specific point so they are not supposed to produce in
that range.
 Long-run Production Decision-making: it is defined as a period in which all the aspect
of costing department and manufacturing are variable. This category of calculating
supply in addition to their existing market series of short term curve shape(Grisold, T.
and et. al., 2020). This is also having the connection with such point of invariant return in
the marketplace of short period which is having three periods of productivity cycle that
are given below:
1. Increasing return to scale.
2. Constant scaling-return.
3. Decreasing returns to scaling.

The above diagram of manufacturing organisation effect from the various parts due to
their short-term profits and having supernormal benefits. What is the condition of having least
proficiency in the long run production of the company.
Manufacturing industry of UK:
The commercial company that are engage in producing product and services in the UK
market are very diverse. It is comprises of several range of product from the different sectors that
includes fast moving consumer goods furniture and technologies. This is having high economic
value in the nation. It also shows the factor of production and their value in order to generate
higher income for the country and manufacturing industry of the UK is the third largest industry
after the service industry and retail sector.
Impact of the perfect competition market in supply:
 Prices: in the perfect competition market the prices are the main consideration of the
company as there is no no one has the ability which will affect the price of the
commodity. There are a certain expenses for the manufacturing industry on their daily
basis for thinking their profit as well as the revenue. For instance there is a organisation
in UK known as IKEA that is manufacturing ready-to-assemble furnitures how will sale
under the prices of the goods increases or the cost exceeds the price of the item. In this

the consumer will also keep buying the product as long as they are meeting their
satisfaction level and until the supplier has come to the point of clearing price in the
market that means the overall supply of the product is equal to the demand.
 Competition: there are large number of companies we are offering similar product and
the overall competition is being reflected by the number of seller and buyer in the market.
The price of the given good supplied to the retailer by the forms will be low in cost and
superior in quality which can increase the overall supply of the commodity in the market.
The competitors also happened to reduce their cost of product in consideration to offer
better customer experience. This also influence the overall economic condition of the UK
as the large number of seller and buyer in the long run market.
 Maximize profit: the main objective of the competitive market is to increase their
overall profitability by supplying more product and services by using the resources at
lower cost and offering quality product so that supply curve of the manufacturing
industry sloping upward in context to their prices(Happ, R. and et. al., 2021).
 Number of sellers: there are different types of goods which are being sold in the large
market and similar product are being manufactured by the companies. As there is no
barrier in the exit or the entry of the new form which create difficulty to analyse the idea
of what quantity is to be supplied by the suppliers and affect the overall economy of the
UK. This leads to create use competition in the large market and create a hurdle for the
new startup company to generate higher profits in the large market.
CONCLUSION
From the above report it is concluded that supply of the product and services is vital in the
target Market by making best use of their resources. There are factors which can reflect the
overall UK economy that includes capital land entrepreneurship and workers. The input of the
company are the essence for them because hit impact directly on the production level of the
company. When the product and services of the company are not manufactured and supplied at
the given time frame it will affect the overall economy of UK and also tends to decrease the
gross domestic product and the disposable national income. This can leads to increase the tax
rate so it is necessary to take the better production decision so that supply your product and
services can be with the demand of the target Market by making best use of raw material and
manufacturing techniques in the production. The perfect competition market is majorly used to

set the benchmark for the existing structure that includes Monopoly and other form can
differentiate their product which leads to increase their prices and generate more profit in the
target market.

REFERENCES
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