BM533 Contemporary Economic Analysis: Supply, Demand, and Walmart

This report provides an economic analysis of Walmart, focusing on the principles of supply and demand and how they influence the company's business practices. It explains the law of demand and supply, detailing the factors that cause movements along and shifts in the respective curves. The an...Read More

BM533
CONTEMPORARY
ECONOMIC
ANALYSIS

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK-1............................................................................................................................................3
Explanation of law of demand, movement with the demand curve and changes in demand
curve factors in regarding to Walmart........................................................................................3
Explanation of law of supply with movement along its curve and shift in supply curve of
Walmart.......................................................................................................................................6
TASK-2............................................................................................................................................8
Difference between emerging theories and models in 21st century and 20th century, and
related both of these with Walmart business practices...............................................................8
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics may be defined as the use of economic analysis to make business decision
involving the best use of an organisation's scarce resources. Economics focuses on business
economics. This theory is based on the relationship between customers and firms. Economics
considers other filed such as mathematics, sociology, psychology and law of economy. This
economics uses the resources in efficiently and effective manner to achieve the social and
customer goals. It focuses on Gross Domestic Product and the Consumers Price Indexation. The
humans are satisfied unlimited wants, economists determine how resources are issued
distribution, production and consumption (Alatawi, 2018). In this report, discuss about the
concept the law of demand, law of supply and the factors which are affected the demand and
supply curve one of the company Walmart which is situated in UK. Further in this report discuss
about the emerging theories and models in 21st century and contemporary economics with 20th
century.
TASK-1
Explanation of law of demand, movement with the demand curve and changes in demand curve
factors in regarding to Walmart
Demand- Demand means the quantity of goods and services that buyers are willing and
buy the product and services at different prices in certain period. Demand in economics is
something more than the desire to purchase, through desire is one element of it. The effective
demand is based on the some factors such as desires, means to purchase and willingness to use
that is purchase. Walmart is a multinational retail corporation that provides the daily goods,
beauty aids and pharmacy to their consumers. It produces the product on the basis of customer
requirement. The demand of the product and services determines the actual prices of goods and
the volume of the Walmart company (Bagnall and et.al, 2018). The two things are to be
considered about the quantity demanded.
 The quantity demanded is based on the given price. At different prices different quantities
of a commodity are generally demanded.
 The quantity demanded is flow. It focuses on the continuous flow of purchases. The
demand for a product or services and the relationship between demand and its
determinants are important for a business. The most important factors which is

considered while determined the demand they are as price of commodity, disposable
income of the consumers, tastes and preferences of buyer and customers expectations.
Law of demand- it is important concept of economics. It is the backbone of the law of
supply because it determines the allocation of resources and prices of the product and services in
every transaction. There are inverse relationship between the law of demand and prices. If the
demanded is high then product of prices low. It is occur due to diminishing marginal utility.
Consumers use of those product which is needed to first, and they consume each extra unit of the
product to serve back to back lower value ends. People need to unlimited wants but the law of
demand satisfied the unlimited wants of consumers. In reference to Walmart company, it focuses
the people need. It provides those goods which is needed of the people first and fulfill the
customer's need (Bălan and et.al, 2021).
Movement along the demand curve: Walmart faces the demand curve situation of its
product. There are various factor which is affected the demand of product and effect of these
product can directly observed in demand curve. When the price of the product change then
demand quantity of the product is also changed but all other things remain same. The other
things such as consumer's income and taste with product and services are remain same but price
of the product change (Caufield, 2019). The movement of demand curve includes with upward
and downward changes.

In the above diagram the price of the product is OP and demand of the product is OM.
The diagram shows the effect of high and low in price on the demand. The price changes from
OP to OP” then demand decreases up to OL and the prices of the product fall down that is from
OP to OP” then demand of the product increases up to ON. The other factors are same but
change in price then demand curve move either up or down (Gökmen, 2021).
The shift of the demand curve- In regarding to Walmart company, when company change
the quantity demand of a particular product, at every sufficient price and other factors are also
changed then the demand curve is shifted to another place. The demand curve can change in
different position but it depends on the factors affecting it.
In the above diagram the income increases then the demand curve shifts to the right and if the
price fall down the demand curve shift to the left and the quantity also decrease.
There are various factor which is affected the demand of a product and services they are
as given below:
1. Price of the commodity- It is very important to determined the price of the product. If the
Walmart company increases the prices of the product then quantity demand of the
product decreases and vice- versa (Helgadóttir, 2021).
2. Prices of related commodities- It has two types- Complementary goods means customers
purchase the simultaneously product and competing goods means when the customers

satisfy the one want and can be used with ease in place of one another. When the
increases the demand of computer then Walmart company automatically increases the
demand of computer software because both the products are complementary.
3. Disposable income of the consumers- The power of purchasing determines the disposable
income of the customers. Essential consumer goods such as cooking oil and food satisfy
the basic need of life and consumed by all individual in a society. These needs of
customers are directly affected the company (Ionescu, 2020).
Explanation of law of supply with movement along its curve and shift in supply curve of
Walmart
Supply- It can be defined as the total price of a given product a supply offer to consumers
at a certain time. It depends on the market movement. If the demand highs then supply of the
product is also increases. The supply creates the relationship between the quantity supplied of a
good with one or more related variables which have influence on the supply of goods. The
supply is also affected by the time period under consideration. In the short term, it may not be
easy to increase supply, but in the long run supply can be easily adjusted in response to changes
in price. Walmart company increases the supply of the product when consumers are demanded
more product. To earn the maximum profit they provides the product at reasonable rate so that
consumers can buy the product and company can survive for the long term. It adopts some rules
so that they can established the equilibrium relationship between the demand and supply.
Law of supply- the law of supply can be understand through a supply schedule and a
supply curve. A supply schedule is the tabular presentation of the law of supply. It shows the
different prices of a commodity and the corresponding quantities that suppliers are willing to
offer for sale. The company can achieve maximum profit when the consumers are necessitates to
buy the product at higher prices. The market supply, like market demand, is the sum of supplies
of a commodity made by all individual firms or their supply agencies. The market supply is
governed by the law of supply and depends on all the factors that determined the individual
producer's supply (Jiang and et.al, 2020).
Movements of the supply curve- When the company increases the supply of product as a
result of an increase in its price, then it can be said there is an increases in the quantity supplied
and it is the upward movement on the supply curve and producers offer more for sale. When

market price falls, there is contraction of supply as producers have less incentive to offer
products for sale in the market.
The supply curve of Walmart shows if the price of the product changes but other factors remain
same. The amount of supply increases due to the price changing. In the above diagram OP line
shows the price of commodity and OQ line shows supply of the product (Ma and et.al, 2019).
When prices increase from 10 to 30 then the supply curve is on point A and will increases in
both the items from A to B.
Shift in the supply curve- When the prices increases, then company produces low at any
prices and the supply curve shift to the left and if the cost decreases and the company produces
more product then supply curve shift to the right. A change in any variable other than own price
will cause a shift in the supply curve, called a change in supply.
There are various factor which is affected the supply curve diagram they are as follow:
Number of firms in the market: Total numbers of suppliers affects quantity supply of product
as when there are more firms presented in the industry then supply of respective product also
increase because of ample commodity providers (Sachajdak and et.al, 2019).
Technological enhancement: New technological enhancements leads in reduction of time,
money and resources usage while production procedure. Introduction of new technology helps
the firms in cost effective manufacturing which increases units of item and that raises the supply
of particular product.

Price of substitute goods: When the price of related goods increase then its demand goes down
which ultimately tends in the increase in supply of substitute product (Singh and et.al, 2021).
TASK-2
Difference between emerging theories and models in 21st century and 20th century, and related
both of these with Walmart business practices
The economic theory is based on the principles and ideas which tell about the economies
function. The objective of theories are to determines the supply and demand concept. It provides
the road map to analyse, interpret and predict the behaviour of financial markets.
Classical economics introduced after the western capitalism. This theory explain the
value, price supply, demand and distribution. Before introduce the classical economics the
Walmart company followed a top down, command and control and monarchic government
policy system. This theory generates the social interest and the public good. Adam Smith
introduce the developments in classical economics. The revelations of this theory is based on the
free trade concept which is known as invisible hand. It serves the domestic and international
supply and demand. This theory was more updated ideas so it is called as government
intervention. Self independent democracies and capitalistic developments are the basis of
classical economics (WAN and et.al, 2020).
To understand the great depression the British economist John Maynard Keynes were
introduced the Keynesian theory. This theories focuses on the total spending in the economic and
its effect on the output, employment and inflation. The demand side theory is based on the
changes in economy in the short period. In 1930th existing economic theory was very difficult to
understand the economic causes and inadequate to provide the jobs of workers. The British
economist John Maynard Keynes change the economic thinking and provide the job who wanted
the work for long term. The main purpose is that to achieve the full employment and price
stability. Inadequate demand serves the high employment. The economic output is based on the
four factors such as investment, government purchases, net exports and consumption. If the
demand increases it is based on theses factors. During the recession, the demand goes down due
to strong forces because expenditure decreases. When the economy fall down the uncertainty
reduces the consumer confidence. The demand decreases due to economic decision like public
and private. The private sector creates the negative macroeconomics, during economy downturns

the customers reduce the spending. These failures call for introduce policy by the authorities.
Such as fiscal policy. The Keynesian's theory support a mixed economic theory which is
develop by the private sector. Increases the government spending on the projects creates the new
opportunities for employees. Keynesian's advised that the government should hire the staff (Wen
and et.al, 2022).
To proposes the economic system, the market socialism theory introduced in the
economy. It is also known as liberal socialism because is focuses on the socialist planning and
free enterprises. This theory works on the publicly owned but consumption and production are
lead by market forces rather than government planning. This theory tells about how the profit
should be divided among workers as wages, society as a profit and the public interest as
dividends.
The new growth theory is focused on the people desires and unlimited wants. In this
theory the organisation should be invest in human capital. By develop opportunities and making
resources obtained within an organisation. The organisation allows the workers to work
independent and work on the independent internal projects that may grow into companies. To
developed a new innovation the employees wants to achieve the higher profit for company.
The Walmart company works on modern economy. The modern economy is a complex
structure. It allocates the limited resources among the individuals and firms. The company works
on the two economic models that is theoretical and empirical. The theoretical model want to
receive the implications about economic behaviour that the agents higher the objectives which
are very defined in the model. In opposite the empirical models objective to achieve the profit in
future. The models is based on the mathematical equations which follow on the economic
behaviour. The objective of this model is to create the sufficient equation to give useful clues
about how the economy works in the business. The models plays an important role in the running
business. The application relates to the financial in the modern time has not applicable to the 21st
century service market. The current economy relates to finance aspects, normal and human
capital are valued. The ideas of 20th century relates to financial was harmed the economy of
Walmart. The past models have replaced and improved on the current financial market of the 21st
century. The current economy faces the some condition such as changes in the market, climate
changes, availability of financial and economic resources and innovation of technology. The
classical model was applicable to the growth in 21st century (Wilson, 2019).

CONCLUSION
In the above report, the economic plays an important role in the business. It determines
how to use the organisation resources so that fulfill the unlimited wants of consumers. There are
two basic concept to understand the economics, Micro economics and Macro economics. Micro
economics creates the relationship between demand and supply. If the demand increases of the
product then supply of the product will automatically increases. There are positive relationship
between the supply and demand. The emerging theories tell about how to use the economic
principles and function. The Walmart does not satisfy the retail industry because the company
focuses on e-commerce sector. The company focuses on the online market operation they would
remove the number of new stores.

REFERENCES
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