Microeconomics and Behavioural Economics: A Contemporary Economic Analysis

This report analyzes the concepts of demand and supply, movement along with the demand curve and change in the demand curve, and the law of supply with its movement in the supply curve. It also compares and contrasts emerging theories and models in 21st century contemporary economics with those of the 20th century and relates both to modern business practices.

BM533 Contemporary
Economic Analysis

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Describe the law of demand, movement along with the demand curve and change in the
demand curve by using the appropriate diagram........................................................................3
1.2 Define the concept of law of supply with its movement in the supply curve and also
change in the supply curve with the use of appropriate curve....................................................6
TASK 2............................................................................................................................................9
Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these to modern business practices...............9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Economics is the concept which drive the human behaviour, reactions & their decisions
that is being faced with the difficulties or the successes. It is the discipline that combine the
history, psychology and polities within the economy. In this, consumer are having integrated
changing demand which is driven from the emerging change within the market. They are having
sufficient purchasing power to buy the particular goods so that they can afford their with better
consideration. FamilyMart Ltd. Is the chosen business organisation for this respective
assessment, it is the Japanese convenience firm which is operating its business as the second
leading chain of stores. Approximately, they are operating with 24,574 stores in different areas
of world. This respective report will cover the concept of demand & supply and also discusses
the movement with the demand curve and supply in the given marketplace. Moreover, this report
will also analyse the emerging theories of 20th ans 21st century and critically evaluate them.
TASK 1
1.1 Describe the law of demand, movement along with the given demand curve & variation in
the demand curve by using the correct diagram.
Demand refers to the choice of the individual for buying the specific commodity and
services, backed with sufficient buyer power in order to buy the particular commodity. There is
no much change in other factors, this only impact due to change in the price of offerings in the
market.
Law of demand
This referred to the state in which opposite relationship has been established in the prices
and the quantity demanded of products & services in the given marketplace and the people are
having sufficient buying power to buy the specific commodity in the target place. When the
prices of commodity rise then the demand for the same products decreases as people do not
purchase goods and services at higher prices, they will always go for affordable goods so that
they can full their needs and wants within the available purchasing power to buy the particular
commodity.

According to the given diagram, it is being stated that the decrease in the given prices
will leads to rise the demand of commodities in the target market as the prices and the quantity is
having the inverse relationship among them. When the price increases from p2 to p23 then he
demand for goods fall-down from q2 to q1.
Following are the elements which impact the demand of the specific commodities and
services which are given below:
 Price of particular commodity: There is indirect connection in the prices & the quantity
demand of comodities & services in the target market. Thus, when the price of the
product increases then the demand for respective commodity decreases in respect to rise
in the price.
 Variation in future expectations: this is defined as the factor which is leading to impact
the entire demand of goods and this is concern to the availability of commodities in the
market. When the consumer is expecting change in the availability of commodities in
near future then the demand for respective good rise and vice-versa. In context to
FamilyMart, when the individual are expecting variation in the prices of the goods in
future then the respective demand of their commodities tends to rise & vice-versa.
 Price of complementary products: These are goods which are being used in
consideration to the other goods as these are totally connected to the another products so

there is the direct connection with the prices & the quantity demand of goods. In
consideration Family Mart, when the price of complementary goods increases then the
respective demand of own good decreases and vice-versa.
 Income of consumer: there is the direct connection in the income and the demand of
goods among the target marketplace. When the people are earning good income the they
can demand more for the goods and services. In context to Family Mart, when the
consumer are having good income level then the demand for respective commodities
tends to rise in the as they are having sufficient purchasing power to buy the specific
goods in the marketplace. On other-hand, lower income level of consumer implied to rise
in the demand of inferior as people will not have the good purchasing power in the
market.
 Preferences of buyer: With the passage of time, people are having changing mind set
and its liking as they are having the appropriate results and changing mind set which are
emerging in the given marketplace. In context to Family Mart, when the buyer are liking
the products and services then the respective demand for commodities and services tends
to increase in the market.
 Given price of substitute commodities: there are commodities that are being replaced
by the another commodities as they are giving the similar level of satisfaction to their
buyer. When the given price of goods increases then the respective demand of another
commodity rises as people always go for the cost effective products which are easily
affordable to them in the market.
Change in demand curve
In this, the demand curve will move to the right or left as depends upon the increase or
decrease in the demand of goods and services in target market. There are various elements that
are influencing the variation in the price, income, preferences of the buyer so that they can buy
the specific commodity & services in the target market. In consideration to Family Mart, demand
curve will shift to the right or left in the market.

From the above diagram, this is analysed that entire demand curve will move to the right
or left due to shift in the right due to decreases in the given prices of commodities in the given
marketplace. In consideration to Family Mart, the initial demand of commodities is d0 and
variation is the respective demand in which shift to d2 or can be d1. This is due to the major
change in the price of products. Income level of buyer & their future expectations.
1.2 Define the concept of law of supply with its movement in the supply curve & also variation
in the supply curve with the use of appropriate curve.
Supply is the fundamental concept that define the total available amount of commodities
which are there for the further sell in the target marketplace. Furthermore, this also defines the
total amount of goods at the specific prices so that an organisation can ensures the higher growth
and revenue in the target market.
Law of supply:
According to this law, this says that there is the direct connection in the supply & the
prices of the given goods in the given market place. When the prices of the commodity tends to
increases then the suppliers increases their supply so that they can increase the higher growth
rate by generating more revenue in the given marketplace. whereas, when the prices of goods
and services tends to reduce then the respective supply of commodities decreases as the firms do
not sell their products at lower prices. In respect to FamilyMart, when the price of goods tends to

rises then the supply of commodity also rises with the aim of improving the entire supply of
goods and services in the target marketplace.
From the above graph, this can be interpreted that the supply curve is downward sloping
as there is the direct relationship in the price and the supply of the particular commodities in the
target market. As per the graph, when the price was p3 then the quantity supplied by supplier
was q3 and rise in the price of given goods tends to
There are various elements that are affecting the supply of commodity in the market and
these are illustrate below:
 Cost of production: when an organisation is selling goods and services as they are
offering the limited aspects of production which includes raw material and employees
who all operate the give task in an correct manner. Sufficient availability of goods and
services helps the supplier to supply more by which they can generate more revenue and
profitability and be the leading company in the target market place. In context to
FamilyMart, when the company do not have the sufficient raw material that can leads to
minimise the supply of goods in the target market.
 Technology used: It is defined as the innovation that is meant by the suppliers by which
they can rise the entire supply of commodity in the target market. In relation to
FamilyMart. When the company is accessing the advance machines and methods by that
they can fulfiller the supply of commodity in the target market.

 Government subsides: These are the benefits that is offered by the government bodies in
order to support the general public as in such way they can reduce the cost of product. In
this, when the government is offering sufficient subsidies in order to reduce the cost of
the company by which company offer more sale in the marketplace.
 Objective of the firms: There are firms whose objectives is to ensure the more profits
and there are company whose aim is to do the social welfare. When the organisation is
trying to enhance the profits then they will reduce its supply in the target market as their
main consideration is to enhance the profits in the target market by which they can
establish the good brand image.
 More than firms: FamilyMart is the retail company who is operating its business in the
international market which is leading to have the huge growth. More number of firms
who are operating its business in the market can leads to impact the profitability of
FamilyMart as consumer will distribute their purchasing from different brands.
 Weather:It is the factor who can not be control by any one so there is the major impact
of the business in the market that is leading to have the growth in the market place. In
context to FamilyMart, They are operating their business in perishable goods as well
which is leading to impact the overall operations of the business.
Change in Supply Curve:
This referred as the shift in the supply curve which occur in specific factors which
includes the cost of productions, technology, subsidies of government and so. In this, increase in
the supply of products tends to shift the supply curve to right and decrease in the supply curve
make shift in the supply curve to the left in the marketplace.

TASK 2
Critical analysis of emerging theories & models in 21st century contemporary economics with
those of the 20th century & connect them both of these to leading business practices.
Contemporary economic is the integrated area of theoretical and empirical research in the
areas of accounting, economic, finance and so on. In context to FamilyMart, managers are
focuses in developing certain discipline by using the theories which are emerging in 20th & 21st
century and these are given below:
Traditional Economic Theories
Keynesian Economics theory: It is the theory that is concerned with the employees who
are conducting their business and it is being fixed that the wages and the prices are fixed and
these are dedicated to the work and also focuses on the effective working within the company by
that they can make sure the huge profits & revenue in the given marketplace. Moreover, this
respective theory is related to the macroeconomics & involves the minimization in consideration
to the consumption and the buying behaviour of the people. there is no such change and also
having main impact in the marketplace.
Neoclassical theory:This particular theory is being introduced by Carl Menger and leon
Walras. This is basically concerned on the demand and supply that are the main focus so that
they can ensures the effective flow of goods in the market. In consideration to FamilyMart,

people are having their particular choices and preferences with integrated demand of goods and
services of current consumption as they are using the offering within the entire business model in
the large market
Contemporary Economic Theories
Behavioural theory: This respective theory which is related to the psychology &
economic business environment and this is launched by Richard Thaler. They are working with
the better consideration in the market so that they can effectively understand the main reason to
have the good behaviour of individual who all are operating their business in the given
marketplace. In respect to FamilyMart, they rightly analyse the behaviour of human with
effective communication. During the Covid-19, this respective theory is based by the people that
are aiming to introduced by the individual and reducing the business cost.
Nudge theory: this respective concept is concerned with the indirect suggestions with
good enforcement is that they can understand the behaviour of the people for good decision
making. In relation to FamilyMart, with the help of automatic cognitive process for good
decision-making during the global pandemic, they are rightly have the better use of theories so
that they can effectively make the used of financial considerations.
CONCLUSION
It is concluded from the given report that demand & supply are the subject matter that
emphasis on the supply & demand of commodities in the given marketplace and the is the way
by which they can ensure huge profitability and revenue. There are certain aspects which
includes the price of commodity, income level of buyer choices of consumer and so on. Supply
refers to the fundamental concept which is related to the huge growth and success in the given
market. Cost of products, state of technology,nature of firms which are impacting the supply of
goods in the market. Lastly, there are cretin theories which are being used as Neoclassical theory,
Keynesian Economics theory, behavioural theory & Nudge theory that are contributing to the
betterment of business organisation.

REFERENCES
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