Introduction to Business Economics

Added on - Apr 2020

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Running Head: BUSINESS ECONOMICSBusiness EconomicsName of the StudentName of the UniversityAuthor note
BUSINESS ECONOMICS1Table of ContentsAnswer to part A..............................................................................................................................2Introduction and Summary..........................................................................................................2Factors affecting demand.............................................................................................................2Factors affecting supply...............................................................................................................2Elasticity concepts and factors.....................................................................................................3Answer to part B..............................................................................................................................3Answer to part C..............................................................................................................................6Market structure.........................................................................................................................10References......................................................................................................................................11
BUSINESS ECONOMICS2Answer to part AIntroduction and SummaryLaw firms provide legal services to people to secure their legal rights. In this part, a locallaw firm Dewey, Cheatem and Howe is chosen and its supply, demand and market conditions areanalyzed. There are different factors affecting demand and supply condition. Three demand sideand supply side factors are considered. The concept of price elasticity of demand and nature ofelasticity for the chosen firm’s service is discussed.Factors affecting demandThree factors affecting market demand curve for Dewey, Cheatem and Howe law firm are asfollowsThe primary determinant of demand for a product is its price. The demand for theconcerned law firm’s service is price charged by the firm for their legal services. Higherthe price lower is the demand and vice versa.Price of related goods like substitute or complementary products influences its demand(Rios, McConnell and Brue 2013. The substitute of the firm’s law services is the legalservice provided by other local firms. If these firms offer similar services at a low pricethen demand for its legal service increases. Similarly, if the services in local firmsbecome costly, then demand increases.The third factor affecting demand is the frequency of legal disputes in the area. Morelegal disputes mean more demand for legal service and hence, a larger market demand.Factors affecting supplyThree factors affecting market supply curve for Dewey, Cheatem and Howe law firm are asfollowsLike demand, price is a direct influencing factor of supply. Supply of law services dependon the price of the services (Bramley 2015.). When legal service becomes expensive thenthe profession seems to be profitable. As more people join the business firm, supplyincreases.
BUSINESS ECONOMICS3Supply in the law firm depends on of the number of efficient lawyers. The supply ofsupply of lawyers depend on the number of law institution in the region. More lawinstitutions mean more lawyers and hence a greater supply.In addition to number of law institution, the supply also depends on the cost of thecourse. An expensive law course means less students will afford to be enrolled in thecourse. This reduces the number of lawyers in the region and hence, a smaller supply forthe legal firms.Elasticity concepts and factorsPrice elasticity of demand indicates how much proportionate change in demand expectedto happen in response to a change in price of that good (Thomas, Lubinda and Angula 2015).The demand for legal services happen to be inelastic. In times of legal dispute peoplehave to take services of the law firms. Once the legal procedure began they cannot change theirdemand even when price changes. As a result, the demand for legal service has very less priceelasticity. In the long-run it becomes more inelastic in nature.Answer to part Bii) There is a reported dramatic increase in the compensation claims going to court
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