Financial And Economic in UK Assignment
Added on 2021-01-03
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Financial AndEconomicLiteracy for Managers
Table of ContentsINTRODUCUTION........................................................................................................................3Question 1........................................................................................................................................3Concept of Consumer Sovereignty on production and profit maximization...............................3Question 2........................................................................................................................................5Market structure, demand and Supply of Tesco and Morrison...................................................5Question 3........................................................................................................................................6Concept of profit and Wealth maximisation................................................................................6Question 4........................................................................................................................................84. Business economic Concepts of environmental policy, fiscal policy, supply side policy .....8contribute to UK Government.....................................................................................................8Question 5........................................................................................................................................9Presenting calculation of ratio and others....................................................................................9a. Ratio Analysis for 2017 & 2018..............................................................................................9b. Present Value.........................................................................................................................10c. Net Present Value...................................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................122
INTRODUCTION There is always dilemma about the concept of how the financial market works and howthey operate and how they impact the global economic environment. The financial literacy formanagers means to understand how the business is performing and to evaluate and assess thesame. The economic literacy means deals with concept affecting money management such asinterest rates. In the present report principles of business and financial economic in internationalcontext with identifying and explain the impact of governmental, monetary and economicpolicies on the decision baking of the business are discussed. Along with this, concepts ofenvironment models of business are defined. The market structure, demand and supply of Tescoand Morrison is presented in the report.Question 1Concept of Consumer Sovereignty on production and profit maximizationThe consumer sovereignty is that theory that the preference of the consumers determinedthe production of goods and services. This means that the consumers use their spending power asvoting for the goods. If the spending of the buyer is good on a particular good this means theproduction needs to increased and vice verses if the customers do not spend the minimal on theproduct which is required for the production of goods and service (Adomako, Danso and OforiDamoah, 2016). The consumers are assumed to choose the commodities according to theirpreference and have a significant in the context of their choices. In the capitalist economy theconsumer have a freedom of choice. This means that the customer is regarded as sovereignty,king or Queen. This is referred as consumer sovereignty. The concept of consumer sovereignty is directly linked with the profit maximisation ofthe organisation as the consumer who has given a choice of preference to buy a commodity andin whatever quantity he/she wants. The urgency in the desire of certain goods is directly relatedto the fact that a consumer is ready to spend a large sum of money and but the good even at thehigher prices which means higher profits (Potrich, Vieira and Mendes-Da-Silva, 2016). Ifrequirement is not that urgent means they are not willing to pay a good amount of money on a3
particular good or service. It shows the reluctance of him/her in spending more money on thatgoods or service and wants to buy the product at lower prices. With expecting lower profits theproducers shrinks the production and produce in smaller quantities of the goods in the market. Thus it can be stated that consumer is sovereign and the manufacturers are bound to setthe prices of their goods and commodities as per the demand of customers (Ali, Rahman andBakar, 2015). The more producers produce the larger the profits they earn. The fate of themanufacturer is sealed with the consumer sovereignty as if the customer has no liking to theirgoods, commodity or service they can in no condition earn profits and if producer set low priceshe/she can incur losses. Business economy and its concepts: The concept of business economics can be defined as that field of economics which isapplied in a business by use of economic theories and quantitative methods to analyse thebusiness enterprise, financials, market related and environmental issues as a whole (Lusardi andet.al., 2017). This contributes in diversification of the organisation structure and defines therelationship with labour, capital and product market. The concept of business economic includesdemand and supply, scarcity, incentives, purchasing power and opportunity cost. The business economic models:The business economic model is hypothetical construct which is used by producers as aset of variables to define relation or the quantitative correlation. The models used in theeconomic are: The classic Economic model:This model depicts the law of demand and supply and their correlation. The law ofdemand states that with an increased in the demands the prices will increase. The law of supplystates that with an increase in the price of the product the supply will increase in the marketplace, where in both the law all other factors demand unchanged (5 Economic Concepts, 2018).This is applied by the business in the international tare to determine the effect of prices changeson demand and supply of goods and services of the organisation.4
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