Demand and Supply Analysis of Tesco: Contemporary Economic Analysis

BM533 Contemporary
Economic Analysis

Table of Contents
INTRODUCTION : ........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2: ..........................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION :
Microeconomics is the study of characteristics of the decision makers within the
economy such as individuals, households and enterprises. Economics is the framework which
focuses on production, distribution and consumption of goods and services. It is the study of the
economic resources along with their use in different conditions. There are various problems
which are faced by the organisations in the market which can make an impact on the working of
the business. There are several factors which are to be considered by the companied such as
customer's, suppliers, competitors and government(Anokhina, Maksimov and Seredina, 2019).
The report will discuss the two main factors of economics which are demand and supply. The
law related to demand and supply along with their curves will also be covered in the report. This
report also covers the contrast of various theories and models which were developed in 20th and
21st century. The report will be prepared on Tesco which is a British international groceries and
general merchandise organisation. The organisation was established in the year 1919 by Jack
Cohen. The company has its headquarter in Welwyn Garden City, Hertfordshire, England, UK.
MAIN BODY
TASK 1
DEMAND:
Demand is the quantity of the consumers who are willing and are able to purchase the
goods and services at particular price in the market. It is the want of the individuals for buying
the products which is associated with sufficient purchasing power. Tesco should study demand
for determining the prices of the products to meet the demand and generate the profits. It has
been seen that businesses can spend a considerable amount of money to identify the amount of
demand the customer's has for the goods and services in the market.
Law of demand

This law is considered one of the most essential theory in the study of economics. It
states that the quantity purchased varies inversely with the price. This is a situation where there
is opposite relation between the price and quantity demanded of the products in the target
market. It is based on the assumption that the individuals have adequate buying ability to
purchase any specific item in the target market(Aulenbacher, Décieux and Riegraf, 2018). The
reason behind this is the diminishing marginal utility. When the rates of the products rises, the
quantity demand of the product in the market reduces in the industry. Similarly, when the price
decreases, the quantity demanded of the product gets increased.
After analysing the figure, it can be said that when the price of the goods and services rises from
p2 to p3, the demand for the products fall-down from q2 to q1 since there is an opposite relation
between the price and demand of the commodity in the market.
Changes in the demand curve along with the factors:
It is known as the elasticity of demand in the economic language. It is the change in
demand due to the change in other essential related factors which have an influence on the