Macroeconomics and Behavioural Economics: Understanding the Law of Demand and Supply, and Modern Business Practices

INDIVIDUAL WRITTEN PROJECT ON
MACROECONOMICS AND
BEHAVIOURAL ECONOMIC

Table of Contents
INTRODUCTION.......................................................................................................................3
TASK........................................................................................................................................3
Law of demand along with movement and changes in demand curve with influencing factors.........3
Law of supply with consideration of its movement and shifts along the supply curve with
influencing factors...........................................................................................................................7
TASK 2...................................................................................................................................10
Contrast and compare and also relate both 20th and 21st century to modernised business operations
and activities..................................................................................................................................10
CONCLUSION.........................................................................................................................13
REFERENCES..........................................................................................................................14

INTRODUCTION
Macroeconomics is the study of an economy’s overall behaviour and performance that is
concerned with the aggregate changes in the economy, such as unemployment, growth rate, GDP
and inflation. This report explained the law of demand and supply along the movement and shifts
in their curves with influencing factors. In the report, the law of demand and supply helps the
manager of Familymart Groceries to understand the factors which influence the quantity
demanded of their products by consumers (Gerber, 2021). There are some factors which come
into light with response to increase or decrease in demand are income level, choices and
preferences of buyers, substitute goods, etc. And also, modern and traditional theories are
discussed in relation to modern business practices to analyse the predictions better for
Familymart Groceries.
TASK
Law of demand along with movement and changes in demand curve with influencing factors
Law of Demand –
Demand is the ability and willingness to buy a particular amount of Good and services at
alternative prices in a given period of time. Economists suggest that the demand is based on the
ability to pay for a required quantity and if the customer is not too able to pay the respective
amount with respect to his purchases, he does not have an effective demand (Afshardoost and
Eshaghi, 2020).
Law of demand states that people will buy more at lower prices and buy less at higher
prices where other factors remaining the same or it refers that a fall in prices results in increase in
quantity demanded and diminishes when price increases, when other factors being constant.

Figure 1 Law of Demand. 2021
From the above diagram of Law of Demand, it can be explained that demand curve
slopes downwards. This is due to continuous decrease in price of commodity, the quantity
demanded kept increasing. At a lower price, the consumer has the more power to spend on
purchasing the same good, so they can buy more at the same price. This results to a negative
relationship between price and quantity demanded. It may be argued from the graph that
customer preferences change in response to price changes, given that other market factors
affecting demand remain constant. When a good’s price rises, demand decreases. Because of his
limited disposable income, a consumer is hesitant to spend more for the good. Familymart
Groceries’ manager uses the law of demand to establish product prices and learn about consumer
demand for their goods and services (Milakis and Van Wee, 2018).
Movement in Demand Curve:
The demand curve is a depiction of the demand function in graphical form. Change in
quantity demanded occurs when the demand for a commodity change owing to a price change
while all other parameters remain constant. And when represented graphically, it is shown as a
movement along the demand curve.