BM533: Demand and Supply Analysis in Contemporary Business Economics

This report critically analyzes microeconomic concepts of demand and supply with reference to Tesco, a leading retail chain. It explains the law of demand, illustrating movement along the demand curve and shifts in the curve due to factors other than price. The report also details the law of supply, showing how changes in price affect the supply curve and how non-price factors can cause shifts. The analysis includes Tesco's strategies for managing costs and enhancing demand, such as penetration pricing. The report further discusses Tesco's efforts to increase online delivery capacity in response to changing consumer demands, highlighting the interplay between supply and demand in a real-world business context. Desklib provides access to a wide range of similar solved assignments and study resources for students.

Critically analysed the following micro
economics concepts with reference to any
business of your choice

Table of Contents
Introduction......................................................................................................................................3
Conclusion.......................................................................................................................................6
REFERENCES................................................................................................................................7

Introduction
Supply and demand in economics is related with relation between the quantity of
commodity and the way manufacturer are willing to sell it at specific quantity and prices. It is a
model of price determination that is to be used as part of economic theory. The cost of
commodity is ascertained by the action of demand and supply in the market (EBecker, Michael
and Michael, 2017). It is related with the equilibrium price and respondents the agreement
between producers & customers of good. TESCO is the largest retail chain of UK and is the third
largest in world that is employing around 440, 000 people in 13 markets with approx 280,000 in
UK, it is a grocery and general customer good retail outlet with global reach. It is having its
central office in UK and have store approx 14 countries in world. In present report there is
analysis of the way law of demand affects the motion on the same demand curve and the way
law of supply is posing a impact on the supply curve and modification taking place in the
organisational activities.
Demand curve:
The measure of commodity is depend on the cost of the commodity & other related
factors that includes price, preferences, seasonal factors and income of customers. All the factors
apart from the price are held constant and the analysis is based on understanding of the relation
between the assorted price levels and maximum quantity that will be purchased by customers
(Michelfelder and Pilotte, 2021). The price measure combinations are then planned on the curve
that is regarded as the demand curve with the price depicted on the demand curve. The price
quantity relationship have to be plotted in the curve which is known as demand curve (Katagiri,
2018) . A demand curve is downward slopping that is reflecting the willingness of customer to
purchase commodities ate lower price levels. There is relation of direct price reduction and
enhancement in the demand of product. In TESCO, the organisation is working towards
managing the low cost leadership position that leads to managing the overall scenario of pricing
strategies in such a way that customer demand can be enhanced in long term. For this purpose
TESCO is focussed to manage its pricing strategies by use of penetration pricing. Where initially
the products are launched at low prices so that the retail brand is able to enhance its present
demand in long run. In TESCO the amount of goods that buyers are willing to acquisition at
higher price is less as the cost of products goes up the chance cost of purchasing that good also

goes up. As a result the people will ignore buying a commodity that will forgo the consumption
of something that they value more.
Supply demand
It is the amount of the commodity that is supplying in the marketplace calculate on the
price obtainable for commodity and potentially many other constituent that includes price of
substitute products, availability of cost of labour, production technology, cot of labour & other
related factors of factor of production (Ascari, Fosso and Bank, 2021). In context of tesco it is
used for a analysing the relation between prices & potentially products that are offered at each
prices. These price amount combinations are then plotted on the supply curve that represent the
price on vertical axis and the quantity is representation on horizontal axis. If there are nay
changes made in the non price factors that may result into displacement in the supply curve while
changed in the process can be traced as per specification mentioned in the supply curve (Glaeser
and Gyourko, 2018).

UK supermarket giant tesco is working towards enhancing their online deliver capacity by 20
percent as the brand was not able to meet the demand of nation by staying home. As per the
chief executive Dave lewis, 85%-90% of the food bought may require a revisit to the store
despite of the weekly amount of home delivery slots that is acceleratory from 660,000 to 805,
000.

Conclusion
It is concluded from the above made analysis it can be said that supply and demand si the
basic analysis of the way sellers and buyers are interacting to determine transaction of the
quantity and prices. Changes in demand and supply are affected and governed by many factors
but the most important aspects is related with the associates specific prices of products.

REFERENCES
Books and Journals
Michelfelder, R.A. and Pilotte, E.A., 2021. The Electricity Production Cost Curve During
Extreme Winter Weather. Journal of Economics and Business, p.106019.
Glaeser, E. and Gyourko, J., 2018. The economic implications of housing supply. Journal of
Economic Perspectives, 32(1), pp.3-30.
Ascari, G., Fosso, L. and Bank, N., 2021. The Inflation Rate Disconnect Puzzle: On the
International Component of Trend Inflation and the Flattening of the Phillips Curve. CFM,
Centre for Macroeconomics.
Katagiri, M., 2018. Equilibrium Yield Curve, the Phillips Curve, and Monetary Policy.
International Monetary Fund.
Becker, G.S., Michael, G. and Michael, R.T., 2017. Economic theory. Routledge.