Factors Affecting Supply and Demand in UK Food Sector

This report analyzes the factors that influence the movement of supply and demand curves in the UK food sector and the strategies implemented by the government to overcome the challenges caused by the COVID-19 pandemic.

Economics for Business

EXECUTIVE SUMMERY
Business economics is branch of economy which is used for applying theories of
economics in practical business life. This report is formulated to define factors which become
the reason of shifting or movement of demand as well as supply curve as well as how
government select equilibrium point. In the second part, relevant strategies which government of
UK apply for control the loss arise due to COVID -19 pandemic, these things are define in
systematic manner.

Table of Contents
EXECUTIVE SUMMERY..............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Explanation regarding factors which becomes the reason of movement in supply curve..........4
Movement in demand curve.........................................................................................................6
Equilibrium of price & quantity...................................................................................................8
Shortage & surplus in food sector................................................................................................9
TASK 2............................................................................................................................................9
Explanation regarding problems and issue food sector of UK face due to COVID – 19
pandemic strategies government of UK apply to overcome issue...............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business economics, is part of economies which useful in determine how theories of
economise useful in practical life and how these theories and model implement and affect
running cycle of an economy. In order to understand relevance of concept of Krugman &
Wells's economics, this report is formulated. In this report, law of supply as well as demand is
define and factor or element which become reason of shifting of demand and supply curve is also
determine. As COVID -19 directly impacted towards goods and service of food sector. This
report also includes, impact of this pandemic and issue government of UK face due to Corona
Virus as well as how government deal in order to control loss arise due to the COVID – 19
pandemic.
TASK 1
Explanation regarding factors which becomes the reason of movement in supply curve.
Supply:This term states quantity of particular goods and services which suppler or
producers willing to produces or sell within the market at specific price and given time period. In
order to run business cycle in effective manner supply play vital role, there are many factor
which related and effect supply. According to Krugman & Wells, in order to identify changes
in supply, curve is formulated which useful to define changes in supply within specific time
period. Theses are define below:
Situation when supply curve shift to right:
Price of food: Prices are directly related with the changes in supply curve according to
Krugman & Wells, when the price of specific product decrease then supply of these goods also
decrease and vice versa. Supply curve in this case shift to right as their will be positive relation
between demand & supply. Price of sea food, soft drinks, olives & tinned fish , meat, milk item
has been raise due to the increase in prices, the supply of these factors also increases. As
customers are willing to use healthy food thus demand of these item have been increase which
become result in shifting of supply curve (Gaspar, 2020).

When supply curve shift to left:
Government intervention: When price of products is increase then at this time supply of
products also decline and it move towards left. Due to the impact of COVID – 19 pandemic
government of UK formulate rigid rules regarding transportation and supply of products a swell
as raw materials which directly impact on the availability of supply of goods as organizations of
food sectors not able to fulfil demand of their customers related with food items. Due to
pandemic issue, government is not able to provides fruits, vegetables items thus supply curve of
these items shifted to left.
Supply curve related with UK food sector:

Impact of availability of goods: There are various factors except price which are also
related with the shifting of supply curve. These includes, preferences of customers, policies,
regulations, and availability of resource all these are elements which also effective supply curve.
Due to the impact of Brixit as well as COVID -19, /UK face problems related with
hiring of workers as more then of 80 % of workers are belongs from European countries and due
to this, food sector organizations specially those entity which run business in hospitality sector
not able to hire workers they face issue related with shortage of labours, which impact on their
availability of supply of goods as well as due to formulation of rigid rules regarding with
transportation, these organization not able to fulfill their ability of vegetables which directly
impact on their production of supply and providing services of supply thus curve of supply
shifted towards left due to the impact of shortage of labour and decrease in the price of import
vegetables and fruit items (Karliner, et.al. 2020).
Movement in demand curve.
Demand: This term is use in different manner to each field of study. In economic terms,
demand is the willingness of consumers to buy their desire products or services which they have
capacity of bear cost of specific product or services at given time period. According to Krugman
& Wells, demand is effect from many factors which includes, price, preference of customers,
impact of substitute or complementary goods, government interventions. Generally when price
of products increase the demand of goods decrease and vice versa, it is principle rule which
universally accepted and other elements also impacted on demand curve. All these are directly
related with the changes in the demand curve, which are define below:
Shift to left:

Income effect: Demand curve generally shift towards left when price of products are increases
then at this time customers demand related to goods automatically decrease. However due to the
impact of COVID -19 many people lost their jobs and the average of income level of public of
UK has been decline which becomes the reason of shifting of demand curve from right to left.
Shift to right:
Impact of complementary goods: Demand curve of products or services move towards
left to right at the time when demand of products increase due to the reduction in price or impact
of the complementary goods. Due to COVID – 19 price of healthcare products, juice, soft drinks,
food items has been raise due to this price of their complementary products also raise, which
become the reason of shifting of demand curve from right to left.

Demand curve of UK sector: Demand curve showcase changes in the demand due to
changes arise between price and other relevant elements as
Impact of taxation policies: Due to the impact of this pandemic, food sector of UK face
many issue, as government's charge high rate of tax which directly impact on the price rate of
particular products.
Due to this price of butter and essential item has been raise as well as price of beer also increase
which directly impact on the demand of these products. UK is consider as one of the popular
tourist destination, tourist get attract towards the food services proved by UK organization,
however due to this pandemic period the rate of demand of restaurants and hotels has been
decline , and it directly impact on the shifting of demand curve (Kellerman, 2020).
Equilibrium of price & quantity.
Equilibrium is define as point at which demand and supply curve match or a point where
demand related to particular product is match towards the availability of supply of that particular
product. It is consider as the point at which perception and thought of suppliers as well as buyers
related with the price of goods are match. On the basis of that government of any country
decided their price of products which showcase in the consumer price index. It is essential to
determine price of products as on the basis for that cycle of economy is run. Thus on the basis of
recognizing market conditions and analysis demand perception of customers, government decide

specific rate of particular product and at which point demand and supply curve meet , price of
product is determine at that point.
Shortage & surplus in food sector.
Economy of UK effect from many factors of business environment. In order to
understand the economy cycle, shortage as well as surplus term play important rile. Shortage is a
situation related to particular product when due to lack of availability of market products supply
of products is shortage as compare to excess of demand of that particular product. On the other
side surplus is a condition in which availability of particular products as compare with the
demand of those products is high . At this situation price of products is decline due to surplus of
supply. At present time UK face issue due to this pandemic period, which directly impact
towards their supply of essential items, food products, availability of luxury products, these are
items which comes under shortage of products, on the other side due to increment in the demand
of health care products, ability of these products are higher which consider in surplus of
products category (Klimek, 2019).
TASK 2
Explanation regarding problems and issue food sector of UK face due to COVID – 19 pandemic
strategies government of UK apply to overcome issue.
Since 2015, UK face many issue regarding maintain and run their economy due to
rescission period and then Brixit agreement, now pandemic which spread all over the world. At
present time the whole world is suffers from COVID – 19 pandemic problem , this various
directly impact on the overall economy of the UK. Specially food sector face from high rate of
decile in revenue and shortage of variety of products. In order to overcome from these issuer
government of UK use dome of their tools of monetary policy as well as tools of economy
which Krugman & Wells define under their book, by implement following policies, government
able to maintain economic rate of UK as well as able to control loss food sector suffers due to
this pandemic period :
 Price control: British government has right to formulate policies and strategies
regarding with price which help in determine price rate of each product. They decide
price and restrict to manipulate price rate to markets, as government set fixed price.
They control price of special product on the basis of observing business environment.

Government set price rate, in order to increase flow in economy they increase the price
rate of beer or liquor products as well as decrease rate of essential food items. On the
basis of identifying requirement of products they are able to manage money cycle of
UK. With the use of implementation of this strategies government able to find out which
item is useful or beneficial for the purpose of increment in the the rate of generating
revenue. Which will useful of beneficial for maintain cash flow of Britain economy. And
On the basis of that government able to control loss they face due to this problem.
 Taxation: This policy is adopted in order to maintain cash inflow & outflow activities
within the economy. On the basis of formulation of taxation policies government able to
raise their income which they generate from states of UK. It is a policy through which
government determine on how much of rate they levy tax on particular food items as
well as how they can impose taxes on that items.
Government on the basis of controlling their tax rate able to determine interest as well as foreign
exchange rate through which they are able to select and determine price rate of well as rate of
subsidiaries in order to find out each factor which affect tax liability.
 Due to the impact of Brixit, government of UK charge high tax rate on goods and
services, however at their time of starting of financial year 2020, government of UK
change their taxation policies. They are proved relaxation to workers , or people belong
from medial class as well as those entrepreneur who newly start up their business. They
also provides relation of tax liability to food sector organization as well as reduce tax
change of food service. However they increase tax rate on selling liquor products as
theses items are not relevance to for health but it is useful in generating revenue. Thus in
order to increases cash inflow rate , government of UK adopt this policy (Krugman, P.
Wells, Volkswirtschaftslehre-Mankiw Makroökonomik-Mankiw and Taylor Verbindung
zu anderen Modulen).
 Fiscal policies: This policy is formulated for the purpose of finding out items on which
government spend their money and this policy help in maintain economic, and
microeconomic conditions, which useful in maintain employment, inflation, and growth
of economy. Due to the impact of COVID -19 in order to mitigate risk. Fiscal policies are
formulated regarding maintain food market of UK, as it is consider as on of the major
source of revenue. Thus policies are implemented regarding providing relation during the

time of start up of new restaurant as well as provides financial services to food sector
organization and motivate workers toward work in this sector.
 They formulate policies which includes development for this sector and bear loss by
providing and formulating new strategies regarding with how to allocate new resource
within their food market.
 Poverty program: Government of UK start poverty program from past many years in
order to provides facilities to poor children for education and other essential facilities as
well as offer them employment for their better life style. Government of UK start this
program in order full-fill requirement of essential facilities which includes, food, house
to those People who lost their jobs due to this pandemic period (Li, and Siame, 2020).
 As well as they also offer subsidies and launch new program which useful in provides
employment to those people who are unemployed. They also run poverty program in
order to maintain their economy. Government run their poverty program to find out
number of workers which they their life below the poverty line. And on the basis of
finding those workers they formulate strategies and implementation of this program
government of UK able to provide them employment as well as increase their standard
of living in order to enhance cash inflow rate within the economy (McKee, 2020).
Due to COVID – 19 problem, government has face many issue specially in food market
however by implementing taxation, fiscal policy they able to control and mitigate loss arises
during the time of lock down period.
CONCLUSION
From the above analysis it has been concluded that UK is considering of the most
developed economy in the world, however since past few year it face slowdown period do
economic cycle due to impact of Brixit and now COVID - 19. Food sector of UK effective
more as compare with other sector of economy, because of dependency of fruits and vegetate and
food materiel items on other countries.
Thus demand and supply curve of UK's economy of particular product shift towards left
demand of some factor also increase due to the changes arise in demand of essential items. In
order to mitigate these problems, government of UK implement poverty program, as well as
implement fiscal and monetary police which useful in provide financial assistance and essential

items to manage the loss and through providing new opportunities government able to manage
loss arise due to the impact of COVID -19.

REFERENCES
Books and journals
Gaspar, J. M., 2020. Paul Krugman: contributions to Geography and Trade. Letters in Spatial
and Resource Sciences. 13(1). pp.99-115.
Karliner, et.al. 2020. Health care’s climate footprint: the health sector contribution and
opportunities for action. European Journal of Public Health. 30(Supplement_5).
pp.ckaa165-843.
Kellerman, A., 2020. The post-Corona city: Virus imprints and precautions. Environment and
Planning B: Urban Analytics and City Science, 47(7), pp.1124-1127.
Klimek, B., 2019. Macro-qualitative Comparisons: Grounded Theory and the Comparative Case
of Norwegian and Danish Food Industries since the 1990s
Transformations. Comparative Sociology.18(3). pp.386-411.
Krugman, P., Wells, R., Volkswirtschaftslehre-Mankiw, N. G., Makroökonomik-Mankiw, N. G.
and Taylor, M. P., Verbindung zu anderen Modulen. MODULHANDBUCH SPO2016.
p.24.
Li, H. and Siame, G., 2020. Nature and Impact of Chinese and South African Engagement on the
Development of the City of Lusaka. The African Review. 47(2). pp.311-335.
Liu, Q., 2019. Chinese React to Jack Ma’s Hunting Trip to UK. In Chinese Research
Perspectives on the Environment, Volume 9 (pp. 142-149). Brill.
McKee, M., 2020. Will E-Cigarette Regulation Evolve in Pace With New Products?. American
journal of public health. 110(6). pp.782-783.

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