Business Economics Assignment: Analyzing UK Egg Prices & Drug Policies
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This essay examines the factors influencing the price of eggs in the United Kingdom using supply and demand analysis, identifying key drivers such as feed costs, bird mortality, quality, consumer awareness, income levels, government policies, and consumption preferences. It also delves into the economic implications of recreational drug use in the UK, highlighting negative externalities and proposing potential government policies to reduce consumption, such as taxation, regulation, and public awareness campaigns. The analysis incorporates economic theories and concepts to provide a comprehensive understanding of these market dynamics and policy interventions.

Running head: BUSINESS ECONOMICS ASSIGNMENT
Business Economics Assignment
Name of the Student
Name of the University
Author Note
Business Economics Assignment
Name of the Student
Name of the University
Author Note
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1BUSINESS ECONOMICS ASSIGNMENT
Table of Contents
Answer to Question 1.................................................................................................................2
Answer to Question 2...............................................................................................................12
References................................................................................................................................19
Table of Contents
Answer to Question 1.................................................................................................................2
Answer to Question 2...............................................................................................................12
References................................................................................................................................19

2BUSINESS ECONOMICS ASSIGNMENT
Answer to Question 1
Introduction
There exist different factors which influence the demand and supply of commodities
and services in a market, which in turn have influences on the level of prices in the market.
Keeping this into consideration, the concerned assignment tries to discuss the factors
influencing the changes in demand and supply in the market in general, thereby emphasizing
on the main factors which have influences on the price of eggs in the United Kingdom (Frank
and Cartwright 2013).
Demand and Supply dynamics: Theoretical Framework
The demand of a normal commodity is inversely related with the price level of the
same and the supply of the commodity is positively or directly related to the price levels,
which in turn implies that the demand curve for normal commodities is usually negatively
sloped while the supply curve is generally positively sloped (Hall and Lieberman 2012). The
dynamics in a market are thus, determined by the movements of demand and supply and the
equilibrium situation is at the intersection of the demand and supply schedules in the market,
as follows:
Answer to Question 1
Introduction
There exist different factors which influence the demand and supply of commodities
and services in a market, which in turn have influences on the level of prices in the market.
Keeping this into consideration, the concerned assignment tries to discuss the factors
influencing the changes in demand and supply in the market in general, thereby emphasizing
on the main factors which have influences on the price of eggs in the United Kingdom (Frank
and Cartwright 2013).
Demand and Supply dynamics: Theoretical Framework
The demand of a normal commodity is inversely related with the price level of the
same and the supply of the commodity is positively or directly related to the price levels,
which in turn implies that the demand curve for normal commodities is usually negatively
sloped while the supply curve is generally positively sloped (Hall and Lieberman 2012). The
dynamics in a market are thus, determined by the movements of demand and supply and the
equilibrium situation is at the intersection of the demand and supply schedules in the market,
as follows:
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Figure 1: Demand Supply dynamics and Equilibrium in the market
(Source: As created by the author)
As is evident, the equilibrium is at the point where the demand and the supply curves
cut one another, with the equilibrium price being (P0) and that of the equilibrium quantity
(Q0) (Rader 2014).
Factors affecting demand
The demand curve shifts towards the right when the demand for products increase in the
market and to the left when the demand decreases. This is evident from the following
diagram:
Figure 1: Demand Supply dynamics and Equilibrium in the market
(Source: As created by the author)
As is evident, the equilibrium is at the point where the demand and the supply curves
cut one another, with the equilibrium price being (P0) and that of the equilibrium quantity
(Q0) (Rader 2014).
Factors affecting demand
The demand curve shifts towards the right when the demand for products increase in the
market and to the left when the demand decreases. This is evident from the following
diagram:
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4BUSINESS ECONOMICS ASSIGNMENT
Figure 2(a): Increase in demand Figure 2(b): Decrease in demand
(Source: As created by the author)
With the increase in the demand, supply remaining unchanged, price of the product
increases and with the decrease in demand for a commodity the price also decreases (Ruttan
and Thirtle 2014). There are different factors which affect these changes in the demand curve,
which are discussed as follows:
Keeping other factors unchanged, the demand for products usually increases or
decreases due to the following factors:
Income- An increase in disposable income results in an increase in demand for products in
general and vice versa.
Substitutes- With the increase in the price of the substitutes, the demand for the products
increases and vice versa (Kalecki 2013).
Complements- With the hike in the price of the complementary products of a commodity, the
demand for the commodity itself and vice versa.
Figure 2(a): Increase in demand Figure 2(b): Decrease in demand
(Source: As created by the author)
With the increase in the demand, supply remaining unchanged, price of the product
increases and with the decrease in demand for a commodity the price also decreases (Ruttan
and Thirtle 2014). There are different factors which affect these changes in the demand curve,
which are discussed as follows:
Keeping other factors unchanged, the demand for products usually increases or
decreases due to the following factors:
Income- An increase in disposable income results in an increase in demand for products in
general and vice versa.
Substitutes- With the increase in the price of the substitutes, the demand for the products
increases and vice versa (Kalecki 2013).
Complements- With the hike in the price of the complementary products of a commodity, the
demand for the commodity itself and vice versa.

5BUSINESS ECONOMICS ASSIGNMENT
Seasonal factors- In many instances the seasonal factors like whether and others lead to
increase or decrease in the demand for certain products or services (Friedman 2017).
Government Policies- The demand for products and services can also depend on the policies
implemented by the government (which may include pricing policies as well as that of tax
and subsidy policies (Canto, Joines and Laffer 2014).
Expectations- The expectation of the consumers regarding future prices also influence the
demand for the products. When the future expected price increases, the current demand for
the commodities increase and vice versa.
Advertisement- Promotional policies and advertisements also have implications on the
demand for the products (Helmes and Schlosser 2013).
Factors affecting supply
Like that of demand, the supply curve for products shifts rightwards with the increase
in the supply and leftwards with the decrease of the same, as the following figures shows:
Seasonal factors- In many instances the seasonal factors like whether and others lead to
increase or decrease in the demand for certain products or services (Friedman 2017).
Government Policies- The demand for products and services can also depend on the policies
implemented by the government (which may include pricing policies as well as that of tax
and subsidy policies (Canto, Joines and Laffer 2014).
Expectations- The expectation of the consumers regarding future prices also influence the
demand for the products. When the future expected price increases, the current demand for
the commodities increase and vice versa.
Advertisement- Promotional policies and advertisements also have implications on the
demand for the products (Helmes and Schlosser 2013).
Factors affecting supply
Like that of demand, the supply curve for products shifts rightwards with the increase
in the supply and leftwards with the decrease of the same, as the following figures shows:
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Figure 3(a): Rise in supply Figure 3(b): Fall in supply
(Source: As created by the author)
With the increase in the supply of a product (demand unchanged) the price falls while
with the decrease in the supply the price for the product increases (Moulin 2014). There are
different factors which affect the supply of products:
Cost of production- With the increase in the production cost of a product the supply of the
same decreases and vice versa.
Technology- With the advancement in technological framework, the supply of products
increases and vice versa (Boland 2014).
Factor prices and availability- The supply of a product increases with the decrease in the
price of its inputs and increase in its availability and vice versa.
Figure 3(a): Rise in supply Figure 3(b): Fall in supply
(Source: As created by the author)
With the increase in the supply of a product (demand unchanged) the price falls while
with the decrease in the supply the price for the product increases (Moulin 2014). There are
different factors which affect the supply of products:
Cost of production- With the increase in the production cost of a product the supply of the
same decreases and vice versa.
Technology- With the advancement in technological framework, the supply of products
increases and vice versa (Boland 2014).
Factor prices and availability- The supply of a product increases with the decrease in the
price of its inputs and increase in its availability and vice versa.
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7BUSINESS ECONOMICS ASSIGNMENT
Price of related goods- With the increase in price of substitutes of a product, more producers
tend to shift to the production of the substitutes, thereby decreasing the supply of the product
itself and vice versa (Cowell 2018).
Government Policies- The policy framework of the government like that of tax and subsidy
also have implications on the supply of a product.
Natural conditions- The supply of products (especially agricultural and other related
products) also depend the natural conditions and seasonal changes in the geographical region
(Varian 2014).
Prices of eggs in the United Kingdom
Eggs fall under the category of normal goods or normal luxury goods in general
across the globe. In the United Kingdom, egg is treated as one of the primary commodities in
the consumption basket of general population (Tomek and Kaiser 2014). There are different
factors which effect the price of eggs in the country, the primary ones being as follows:
Cost of feeds- An increase in the cost of feeds of the birds, increases the cost of poultry
farming, which affects the supply of eggs negatively, as can be seen from the following
figure:
Price of related goods- With the increase in price of substitutes of a product, more producers
tend to shift to the production of the substitutes, thereby decreasing the supply of the product
itself and vice versa (Cowell 2018).
Government Policies- The policy framework of the government like that of tax and subsidy
also have implications on the supply of a product.
Natural conditions- The supply of products (especially agricultural and other related
products) also depend the natural conditions and seasonal changes in the geographical region
(Varian 2014).
Prices of eggs in the United Kingdom
Eggs fall under the category of normal goods or normal luxury goods in general
across the globe. In the United Kingdom, egg is treated as one of the primary commodities in
the consumption basket of general population (Tomek and Kaiser 2014). There are different
factors which effect the price of eggs in the country, the primary ones being as follows:
Cost of feeds- An increase in the cost of feeds of the birds, increases the cost of poultry
farming, which affects the supply of eggs negatively, as can be seen from the following
figure:

8BUSINESS ECONOMICS ASSIGNMENT
Figure 4: Decrease in supply of eggs due to increase in cost of feeds
(Source: As created by the author)
This in turn, with the demand remaining unchanged, can increase the price of eggs in
the UK. Again, the inverse happens if the cost of feed falls (Valin et al. 2014).
Death of birds- Instances of sudden death of birds in huge numbers due to diseases and
similar reasons can also lead to fall in the supply drastically, thereby increasing the price of
the same (Valin et al. 2014).
High quality- The price of eggs also depends on their quality. If the quality of eggs is high,
then the demand for the same also increases, the effects of the same being as follows:
Figure 4: Decrease in supply of eggs due to increase in cost of feeds
(Source: As created by the author)
This in turn, with the demand remaining unchanged, can increase the price of eggs in
the UK. Again, the inverse happens if the cost of feed falls (Valin et al. 2014).
Death of birds- Instances of sudden death of birds in huge numbers due to diseases and
similar reasons can also lead to fall in the supply drastically, thereby increasing the price of
the same (Valin et al. 2014).
High quality- The price of eggs also depends on their quality. If the quality of eggs is high,
then the demand for the same also increases, the effects of the same being as follows:
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Figure 5: Increase in demand due to high quality of eggs
(Source: As created by the author)
Thus, with the rise in demand for eggs (supply remaining unchanged), the price of
eggs is expected to get hiked in the UK.
Increase in awareness about healthy eating- The current increase in the awareness of people
in the UK, about healthy eating habits can also have positive implications on the demand for
eggs, the result being same (as that of Figure 5), where the increase in demand leads to
increase in the price of eggs (Lee, Gereffi and Beauvais 2012).
Increase in income- The increase in the disposable income of people is also expected to
increase the demand for eggs, which may increase the price of the same.
Government policies- The production of eggs also depend on the government policies and the
tax and subsidy situations. For instance, if the government of UK provides subsidies to the
poultry farmers, then the supply of eggs is expected to increase, the result being as follows:
Figure 5: Increase in demand due to high quality of eggs
(Source: As created by the author)
Thus, with the rise in demand for eggs (supply remaining unchanged), the price of
eggs is expected to get hiked in the UK.
Increase in awareness about healthy eating- The current increase in the awareness of people
in the UK, about healthy eating habits can also have positive implications on the demand for
eggs, the result being same (as that of Figure 5), where the increase in demand leads to
increase in the price of eggs (Lee, Gereffi and Beauvais 2012).
Increase in income- The increase in the disposable income of people is also expected to
increase the demand for eggs, which may increase the price of the same.
Government policies- The production of eggs also depend on the government policies and the
tax and subsidy situations. For instance, if the government of UK provides subsidies to the
poultry farmers, then the supply of eggs is expected to increase, the result being as follows:
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Figure 6: Subsidy to the sellers of eggs
(Source: As created by the author)
The increase in supply of eggs is expected to bring the price of the same down in the egg
market of the UK.
Consumption preferences and related products- The demand for eggs may also change with
the change in the consumption pattern of the people in the UK. For instance, with greater
number of people turning vegan, they may shift to other vegetarian options, which may lead
to a decrease in demand for the same (Ravindran 2013):
Figure 6: Subsidy to the sellers of eggs
(Source: As created by the author)
The increase in supply of eggs is expected to bring the price of the same down in the egg
market of the UK.
Consumption preferences and related products- The demand for eggs may also change with
the change in the consumption pattern of the people in the UK. For instance, with greater
number of people turning vegan, they may shift to other vegetarian options, which may lead
to a decrease in demand for the same (Ravindran 2013):

11BUSINESS ECONOMICS ASSIGNMENT
Figure 7: Effects of increase in demand for substitutes of eggs
(Source: As created by the author)
The fall in demand can lead to a fall in the prices of eggs in the United Kingdom.
Conclusion
Thus, the above discussion asserts that the price of eggs in the UK, is subjected to
both demand and supply side dynamics. While the demand side factors include those of
increase in awareness of healthy consumption, quality of eggs, people opting for
vegetarianism, income level and others, the supply side factors consist of cost of feeds, death
of birds, government policies of tax and subsidies and others.
Figure 7: Effects of increase in demand for substitutes of eggs
(Source: As created by the author)
The fall in demand can lead to a fall in the prices of eggs in the United Kingdom.
Conclusion
Thus, the above discussion asserts that the price of eggs in the UK, is subjected to
both demand and supply side dynamics. While the demand side factors include those of
increase in awareness of healthy consumption, quality of eggs, people opting for
vegetarianism, income level and others, the supply side factors consist of cost of feeds, death
of birds, government policies of tax and subsidies and others.
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