BM533: Contemporary Business Economics - Theories and Modern Practices

This report provides a comprehensive analysis of contemporary business economics, focusing on the microeconomic principles of demand and supply with reference to Marks and Spencer. It explains the laws of demand and supply, detailing movements along the curves and shifts in the curves, illustrating these concepts with diagrams. Furthermore, the report compares and contrasts emerging economic theories and models of the 21st century with those of the 20th century, relating these theories to modern business practices, including Modern Monetary Theory and Keynesian economics. The analysis aims to provide insights into how these economic concepts and theories impact business strategies and decision-making in today's dynamic business environment. Desklib provides access to this and many other solved assignments to aid students in their studies.

BM533: Contemporary
Business Economics

Table of Contents
Introduction........................................................................................................................3
Main Body..........................................................................................................................3
Task 1................................................................................................................................3
1.1 Explain the law of Demand, movement along the same demand curve (with the
aid of diagram) and changes in demand curve (with the aid of diagram).................3
1.2 Explain the law of Supply, movement along the same supply curve (with the aid
of diagram) and changes in supply curve (with the aid of diagram).........................7
Task 2..............................................................................................................................10
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...................................................................................................10
Conclusion.......................................................................................................................13
References ......................................................................................................................14

Introduction
Business economics is the process that used in studying the various attributes
faced by companies. In the above mentioned field, components and functions of market
place were analysed such as supply and demand. It concludes certain economic factors
that impacting corporation operation. Business economics analysed the issues
occurring in corporation sectors such as market and financials related issues through
theories and quantitative methods. In this given report business concept of Marks and
Spencer will be taken into consideration (Andjelkovic and Radosavljevic, 2019).
Marks and Spencer is a British multinational retail brand with the Headquarter in
London. It was founded in 1884 by Michael marks and Thomas Spencer. In this
mentioned report micro economics concept of above listed company along with demand
and supply concepts will be discussed. Further, comparisons of some theories and
models of 21st as well as 20th century and their relation with modern business practice
will be illustrated in given coursework (Bozok, 2019).
Main Body
Task 1
1.1 Explain the law of Demand, movement along the same demand curve (with the aid
of diagram) and changes in demand curve (with the aid of diagram)
Law of demand
The law of demand is the concept that shows the factors through which an
demand for product and services can varies. Basically the law derives relation between
price and demand. Any changes in the price can diversely affects its demand in the
marketplace. The mangers of Marks and Spencer price allocation on products directly
affects the demand of targeted customer in market (Henderson, 2021).

 Higher the price lower the demand.
 lower the price higher the demand.
The demand varies inversely with price which states due to diminishing margin
utility. Hence the price plays a vital role in increasing and decreasing sales of given
company. Through the law of demand mangers of Marks and Spencer were able to
identified the current scenario according to customer behaviour that succours into
priced their product into market.
Movement in demand curve
The movement in demand curve basically depends on when commodity changes
in quantity demands as well as price moves the curves in specific direction. Through
these factors the movement of curve moves from upward to downward. The movement
done along the curve as well as the determinant of such changes is because of price. In
Marks and Spencer the demand curve of their apparel moves upwards and downwards
through the price set by them (Hodicky and et. al., 2020).

In the above graph the conceptional presentation of demand curve is derived
with the help of price. Marks and Spencer has the wide variety of products along with
men and women. Company generally provides the quality products to its customers with
competitive pricing. The mentioned company delivers its services globally that intend
to show the vast customer base. Hence the price plays a major factor in demand. Form
the past data of given company it is seen that when company lowered their product
price during the sales form P TO P1 its quantity demand were increase from Q TO Q1.
On contrary when they increase the price of its product from P TO P2 the demand were
inversely declined from Q TO Q2. Hence, it is shows the inverse relationship between
price and quantity demand.
Shift in demand curve
The shift in demand curve shows the changing in quantity of demand that shifts
the demand curve from one place to another. The determinant in changing such curve
is other than price. The price remains same but due to other factors quantity demand
trends change. In the below points some of the determinates are taken into
consideration that have the potential to shift the demand curve of Marks and Spencer.

Factors affecting the demand Changes in income- In every economy income is the main factors that derives
the demands. It is the determinant factor that can impact the sale of Marks and
Spencer. Since after the COVID income of peoples of UK has increased that
gives an opportunity to spend on other things rather than essential goods.
Because of such change demand for products of Marks and Spencer has
increased which shifted their demand curve from its last year stats (Hoppe,
2020). Availability of substitute products- In the competitive market several brands
are offering their product in retail industry. Thus there are number of products
available in the market that have the ability to decrease the demand for given
company product. Changes in taste and fashion- The fashion industry is the most upgrading and
fast evolving sector that generates number of product according to the customer
taste. Through such variety of products it is obvious customers tastes changes
rapidly according to the fashion. Hence if customers get bored to mentioned
company products due to outdated clothes can declined the sales that ultimately
shifts the demand curve from Q to Q2.

Environmental factors- The mentioned company deals in apparel industry in
which weather plays a major role. In develop the favourable sale for given company
operations weather is the key consideration. As mentioned in the stats that UK facing
the problem of rising temperature due to climatic change and recorded all time high
temperature. Hence due to such unpredicted consequence declined the sale of winter
products in UK market. In instance the demand for given company winters collections
has downfall that leads to shift the demand curve to left side (Gunarathne and et. al.,
2021).
1.2 Explain the law of Supply, movement along the same supply curve (with the aid of
diagram) and changes in supply curve (with the aid of diagram)

Law of Supply
Law of Supply states that price paid by customers for a commodity and its supply have a direct
relationship keeping other factors constant. Moreover, If price for a commodity rises and other
factors remain constant then supply of the commodity increases in the market. This phenomenon
occurs because of the decrease in demand due to rise in the prices for a product or commodity.
When the price rises, suppliers enlarges supply into the market looking for higher profits with the
increased price. There are various factors affecting change in the supply other than price such as
(Schach and Madlener, 2018):
 Input Cost: It is meant by cost incurred in the production/manufacturing procedure of a
particular commodity. Input cost and supply have a inverse relationship, as when the
input cost is higher it results in lesser supply and when input cost is lesser the supply for
the commodity is high.
 Number of firms: More number of firms selling the same product will increase the
supply for the commodity. For instance, demand remaining constant as the customers are
constant for the commodity and the supply increases due to more suppliers in the market.
 Improvement in technology: Improvement in technology will lead firm incurring lesser
cost of production of a commodity. Lesser cost will imply higher supply in units by the
supplier.
 Objectives of firms: Firms with objectives of profit maximisation will decrease their
supply as to earn more. On the other hand, firms with a aim of targetting revenue or sales
maximisation will increase their supply into the market.
 Productivity of workers: When the workers are highly productive and are used
efficiently it increases output and reduce costs of production. More productive workers
will lead to increase the supply of the commodity.

Movement along Supply curve
The above diagram shows that supply curve is upward sloping from left to right. Left side
of the diagram is denoted with price units and the bottom of the diagram is denoted with
Quantity supplies in units. As seen in the picture P3 units of price has Q3 quantity supplied by
the supplier and afterwards, as the price rises quantity supplied is increasing which results in
Upward movement sloping Supply Curve from left to right. The movement along the supply
curve is a straight line supply curve where the price as well as supply is increasing. In movement
along the same supply curve factors other than price remains constant. The major reason of this
direct relationship is the increased profit factor. When the price has raised it allows a additional
profit to the supplier with a sale of every additional standard unit sold. When the price falls
resulting in decreased supply shows a downward sloping movement of the supply curve with
other factors remaining constant. In the above picture if the price P1 falls to price P2 or P3 then
the quantity supplied will decrease from Q1 to Q2 or Q3 accordingly.

Shift in Supply Curve
A shift in supply curve occurs when the quantity supplied increases with the
impact of other influencing factors other than price. In the case of Shift in a supply curve
the price remains constant. The supply curve shifts to the right in case of increased
supply units and to the left in case of decreased supply units on the same line of
constant price. The other factors affecting supply curve includes Input cost, technology,
productivity of workers, transportation facilities, etc. When the firm reduces its cost of
production then it could sell more products on the same price and thus, results in
increase in the Supply (Tang, 2018).
Task 2
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
Contemporary economics represents advanced empirical and theoretical
researches in economics, accounting, finance and management. In light to the fact that
there are variety of drastic changes that can be seen in modern business environment.
The field of macro-economics plays a vital role in analysing such environment and
develop better standards of operating in specific industry being in business
environment. There are variety of theories that are being considered in respective field
and a vision to see economy as a whole (Guirguis, 2019).

Emerging theories and models of contemporary economics/ 21st century
contemporary economics
In modern business environment complex business environment, unstable
economic factors, regular changes in consumer behaviour etc. are some major aspects
when modern business environment is being taken into consideration. Exploring some
business aspects in which managers of the corporate firm have to tackle with such
changes while implementing required business strategy to attain business goals and
objectives. For the purpose being role of emerging theories of contemporary economics
have a greater importance. Such theories develops effective standards of business
workings on the basis of which effective growth of organisational firm can be ensured.
Following are some emerging theories of 21st century contemporary economics; Modern Monetary Theory: Under the said framework, monetarily countries like
the U.S., U.K., Japan, and Canada, that facilitates their spendings relative to
taxation and borrow in a fiat currency for which they excise full control. They are
not operationally constrained by revenues when it comes to federal government
spending. The central idea which is being placed for the given theory is that,
legislations or governments with a fiat currency system should or can be printed
as much money as they need to spend. This is supportive with the reason that, it
can't go insolvent or broke irrespective of any political decisions and relative
other forces. Keynesian economics theory: The said theory is another supportive branch of
macro economics which relates to total spendings in an economy with derivates
to output, inflation and employment. Presented theory illustrates on demand-side
theory for which focus and efforts are made in respect to bring in changes in
relatively shorter period of time or in a short-run. Taking derivates of the theory,
a government of an economy is being advised to facilitate government
spendings and lowering taxes out of which aggregate demand of region can be
stipulated. This could prove to be an effective theory when taking out any
economy out of depression (Kikuchi, 2019). Marxism: The given theory takes key considerations to political, social and
economic philosophy. Under this, effect of capitalism on labour, economic

development and productivity to overturn capitalism in favour of communism is
being facilitated. The theory stays strong hold to worker's revolution however,
struggles between social classes of individuals in an economy.
Theories and models of contemporary economics in 20th century
Economics is the science that studies production of good and services in a
society and enables effective measures for an individual in regards to their
consumptions. At times of 20th century, there were several business issues and
challenges as they were not enough experienced to deal with market uncertainties and
complexities. Following are some theories which were being proposed at that time and
which related to enabling better standards of working in business organisation; Demand-supply theory: The stated theory explains the interactions between
sellers of resource and buyers of the resources. The given theory establishes
relationship between price and willingness of individuals to sell or buy that
particular product or service. Under the given theory relative demand and supply
of products as well as service are being taken into consideration. This enables
with better decision making over economical aspects of an economy (Griffiths,
A., 2018). Neoclassical economics: Stated theory is a broader theory of economics which
majorly focuses on demand and supply as an important force which drives
pricing, production, services and goods of a economic region. Under the theory
consumer first concern is being taken into consideration in respect to maximise
personal satisfaction. Therefore, they make purchasing decisions based on their
evaluations of the utility of a product or service. Supply-side theory: Under mentioned theory, it is being said that increase in
supply of goods will lead to economic growth. This theory is sometimes related to
fiscal policy for which regulation of government expenditure as when required in
an economy.
Relation to modern business practices
Taking contrast of operational working at M&S, managers of the given firm
facilitate working of their business operations in respect to various economic theories. In
relative production department of the business firm, various market researches are