Impact of UK Regulation on Market Power

Added on -2020-02-12

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Business Economics
TABLE OF CONTENTSIntroduction......................................................................................................................................3TASK 1............................................................................................................................................31.1 Economic problem of scarcity and demand resource allocation ..........................................31.2 Ways to achieve equilibrium in a market ............................................................................41.3 Importance of different market systems and role of opportunity costs.................................41.4 Role of opportunity costs......................................................................................................51.5 Elasticity of demand and its importance in market interaction..............................................5TASK 2............................................................................................................................................62.1 implication of pricing and corporate objectives of operations...............................................62.2 Setting of prices in different market structures......................................................................72.4 Firm behavior is affected market structure and operations ..................................................72.4 Impact of UK regulation on market power............................................................................8TASK 3............................................................................................................................................83.1 Analysis of change in market structures................................................................................83.2 Tools available to meet macroeconomic policy....................................................................93.3 Success of a government’s policies in achieving macroeconomic objectives......................93.4 Economic performance of an economy in the global market..............................................10TASK 4 .........................................................................................................................................104.1 Theory of comparative advantage........................................................................................104.2 Advantages and disadvantages of free trade for Tesco........................................................114.3 Impact of emerging economies over the developed economies..........................................124.4 Evaluation of the impact of recent domestic and global economic shocks within economy....................................................................................................................................................12CONCLUSION .............................................................................................................................12REFERENCES..............................................................................................................................142
INTRODUCTIONBusiness economics is field which use by enterprises use various theory and quantitativemethods for analyze businesses activities and factors which contributed to organizationalstructures. It is basically considered as the part of micro economics (Akram, 2014). Thiseconomic concepts help to managers of an enterprise for framing liable decision in regard tobenefits of organizations. It is important to handle the major economic issues of commencingbusiness operations where company now a day operating at almost every corner of world. Business economic is mainly concerned for macro analysis of firms where it'sfundamentally helps to administrative bodied which are related to organization strategicaldecisions (Andries and Czarnitzki, 2014). Such decisions mainly includes dealing with anyscarcity or distribution of resources on the basis of varied accessible theories of markets. Thepresent report is basically focuses on dealing with similar economic consideration which helps toTesco for running its business operations. It is the largest retail company in UK and one of thefamous global brand. TASK 11.1 Economic problem of scarcity and demand resource allocation Scarcity and demand resource allocation is the fundamental economic problem. It meansthat resources are limited as compare to human wants. It can be stated that every society hasinsufficient resources to fulfill all human wants and needs (Benavides-Velasco, Quintana-Garcíaand Guzmán-Parra, 2013). In UK economy, people have restricted number of resources andtheir desires are not limited. In order to manage the scarcity of resource and demand allocationproblem, entity have to make choices. The wants are limitless but resources are finite. Humanhave to choose only that resource which gives maximum level of satisfaction to their wants. Forexample, UK government policies are made to deliver improvement in standard of education,National Health Service and transport systems because it provides maximum benefit to thesociety (Blair, and Sokol, 2014). These economic problems also affect the business of Tecso Plc. Entity is also facingproblems regarding the resource. For managing this problem entity use rational consumer theory3
so they can prove maximum benefits to its customers (Carroll and Shabana, 2010). Buyersalways make rational decision. It means that the consumers always chose those products whichgive him higher level of satisfaction. For example, customers have limited income so Tescofocuses on producing cost effective products by raising their living standard. 1.2 Ways to achieve equilibrium in a market Demand and supply is considered as market forces which help the economy in makingallocation of resources (Everaert, Sarens and Rommel, 2010). With the help of these marketforces, economy can gain maximum utilization of their scare resources. Law of demand & SupplyAs per law of demand, quantity of demand falls as the prices of commodity rise the lawof supply is stated that when price increases quantity supply is also increases (Fair, 2010.). Themain aim of demand and supply is to provide correct information regarding to pricedetermination of commodity goods and services. EquilibriumWhen demand and supply are same then it is called as the equilibrium point. It is thatpoint where quantity demanded and quantity supplied are equal (Geithner, 2014). With the helpof this interaction point, market prices of commodity are decided. The role of demand and supply both are the key factor of economic activity. These twofactors influence each other and on the basis of these factors prices of consumers good andservice is determined. Market forces also create huge impact on the Tesco's activities. Throughthese market forces, entity set prices of their products so that they can gain maximum share ofmarket (Granger, 2014). This also helps them in for making output decisions.1.3 Importance of different market systems and role of opportunity costsA market system is the network of buyers, seller and other factors which work togetherfor producing goods and services (Laubach and Williams, 2016). There are mainly four types ofmarket systems in economy. Perfect market systemsA perfect market system in that market where large number of buyer and sellers deal withsimilar nature of goods and services (Mason and Brown, 2013). In these markets, all buyers sell4

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