Microeconomics and Behavioral Economics: Elaboration of Demand and Supply, Comparison of Economic Theories and Modern Business Practices

CW1-
Microeconomics and
behavioral economics

Contents
INTRODUCTION.................................................................................................................................3
Task 1....................................................................................................................................................3
Elaborate the law of demand, movement along the same demand curve and changes in demand
curve along with the factors that have impact on it with the help of suitable diagram.......................3
Discuss the law of supply, movement along the same supply curve and changes in supply curve
with the aid of diagram......................................................................................................................7
Task 2..................................................................................................................................................10
Select two emerging theories or models of 21st century contemporary economics and two 20th
century models. Compare and contrast and relate both to modern business practices.....................10
CONCLUSION...................................................................................................................................13
References...........................................................................................................................................14

INTRODUCTION
The upcoming report highlights the solutions for the problem that is faced by
Familymart Groceries in the fluctuation in its daily sales. The newly recruited sales manager
is unable to understand the logic behind the variation and is unaware about the
microeconomic concepts. The following report consists of the notions on the demand and
supply along with the analyzation with the help of useful graphs. Moreover, it also contains
those elements that influence the demand and supply for the product. Furthermore, the report
comprises of the theories which represents the connection between them in the modern
business practices.
Task 1
Elaborate the law of demand, movement along the same demand curve and changes in
demand curve along with the factors that have impact on it with the help of suitable diagram.
The law of demand is the most important topic in the economics. This shows the
inverse relation between the quantity demand and price of a commodity. It states that keeping
other factors aside, if the price of a product increases, then the quantity purchased will be
decreased or vice- versa (Bon., 2018)
The law of demand will assist the Jack Dobb, the new sales manager of Familymart that the
things are priced the manner they are. This law works by two factors the one is demand
schedule and the other is demand curve. The demand schedule helps in the evaluation of apt
quantity that a consumer will purchase at the provided price and the demand curve allocates
those figures on charts.

Graph 1: Law Of demand
As per the above representation there are can be that Y axis shows the price and X axis shows
the quantity demanded. When the price for the product is 2 the purchased quantity was 10.
But when there is a hike in price then the quantity demanded also starts diminishing.
 Movement along the demand curve and shift of the demand curve:
Familymart will have to face the demand curve for the goods that it is supplying. There are
lot of components the influence the law of demand and these changes can be driven by
analyzing the variations in the demand curve. These factors can further be classified in two
categories i.e., the change in and demand and the change in quantity demanded (Sadeghi and
et.al., 2020)
Keeping other factors unchanged, when there is a change in the specific commodity, due to
the change in price, then the movement in the quantity demanded with the same curve
happens. In this the other factors like change in the consumer income, preference, taste etc.
remains constant that means they do not change. In this case, the changes that occurs in the
price affects the quantity of demand for a commodity and this leads to the movement in
demand curve. The motion takes place in two ways that is upward and downwards.
Graph 2: Movement in demand curve.