Analysis of Contemporary Business Economics Theories and Models

This report delves into contemporary business economics, beginning with an introduction to the field and its application to business enterprises. Task 1 focuses on the law of demand, detailing its inverse relationship with price and quantity demanded, and explores movements along and shifts in the demand curve, driven by price and other determinants like income and consumer preferences. The law of supply is then examined, highlighting the direct relationship between price and quantity supplied, along with movements and shifts in the supply curve influenced by factors such as natural conditions and technological advancements. Task 2 compares and contrasts economic theories and models of the 20th and 21st centuries, relating them to modern business practices. The report concludes by summarizing the key findings and providing a list of references.

CONTEMPORARY
BUSINESS ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Law of demand and movement along with same demand curve and changes within the
demand curve..............................................................................................................................3
Law of supply along with movement in supply curve and changes within the supply curve.....5
TASK 2............................................................................................................................................8
Comparing and contrasting between the emerging theories and models in 21st century
contemporary economics theories with the 20th century and relating both with the modern
business.......................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business economics is the field related with applied economics and undertakes the use of
different economic theories and quantitative methods for analysing the business enterprises. It
also involves the factors contributing to the diversity relating to the organisational structure and
the relationship among the phone and other factors like capital labour product market and others.
The present study outline the law of demand and how the law of demand have some changes
within it and the movement along with the same demand curve. Furthermore NG similar manner
law of supply will be discussed along with the movement and changes within the supply curve.
In the end the discussion will be undertaking place on comparison of economic theories of 21st
century and 20th century and how it relates with the modern business.
TASK 1
Law of demand and movement along with same demand curve and changes within the demand
curve
The law of demand state static other things being constant the price and quantity
demanded are inversely related with one another. This simply means that when the price of the
product is increasing then the demand of that product will decrease. this is particularly because
of the reason that increased the prices of the product are increasing then the consumer will not
buy the product because of high prices. On the other hand in case the prices of the product will
decrease then consumer will buy the product in more quantity.
Movement along with same demand curve
The movement along the same demand curve is being caused by the changes within the
price only. This movement along the same core and was the shift of the demand curve and this
can be either an increase or decrease in the demand. The movement along with the demand curve
is occurred when there is a change within the price of the product (Brenner, 2018). Hence the
major factor affecting the demand to move along the same demand curve is the only factor price.
Hence movement along with demand curve is happen due to the price only and not any other
factors.

Thus with the help of the above chart it is clear that when the price was P1 then the
quantity demanded was Q1. As the price decreased to P2 to the quantity demanded increased to
Q2. In the similar manner when the prices increased to p0 then the quantity demanded decreased
to Q0. Hands with it can be stated that the price is the only factor which affects team quantity
demanded of the product. Hence, when the quantity demanded changes due to changes within the
price then there is a movement along with the same demand curve and the demand curve does
not shift to any other place.
Shift in demand curve
The shift in demand curve is being defined as the changes within the demand curve due
to change within the determinants of demand other than the price. Hear any change within the
price does not affect the demand of the product of the service. But the shift in the demand curve
is majorly due to the factors other than the price (Chang, McAleer and Wong, 2020). These
factors involves the following different factors-
 The major factor which affects the ship within the demand curve is the income of the
buyers. This is pertaining to the fact that increase the income of the buyer is increased
then the demand of the luxurious product will increase. Hence in this case the law of
demand does not effective demand of the product. On the other hand in case the income
of the buyers decreases then in this case the demand of the normal goods and the
necessity goods will increase.
 In addition to this another major factor affecting the shift within the demand curve is the
changes within the consumer trends and taste. Hence in this case as well the demand of

the product will shift due to the changes within the taste and preference. For instance, in
the present around the consumers are having a trend of consuming healthy of food
products (Tien, 2019). Hence in this case even if the prices of the healthy food products
will be more than also the people will try to consume it at any cost. This is particularly
because of the reason that these things are in Trend and it will attract a consumer to any
extent.
 Along with this is another major factor affecting the shift within the demand curve is the
expectation of the future prices. This is pertaining to the fact that in case the consumer is
expecting to have a rise in price within the near future than the demand of the product
will increase in the present time. On the other hand in case the consumer expecting a
price decrease within the product in near future then the demand of the product in current
will decrease.
With the help of the above graph it is very much clear that the price of the product is 12
but at the same level of price the quantity demanded change to a great extent. Earlier the demand
of the product was 80 and price 12 only but to with respect to some changes other than price lead
to an increase within the demand at the same price level to 115. Hence with this graph it is clear
that the price does not affect the quantity demanded of the product to a great extent.
Law of supply along with movement in supply curve and changes within the supply curve
The law of supply states that other things being constant the price of the goods or services
increases as the quantity of the goods and services offered by supplier also increases (Acs and
et.al., 2018). On the other hand it can also be stated that if the prices of the product will decrease
then the supply of their product will also decrease. It can be stated that I'm when the price of the
product goes up the supplier will try to maximize their profit by increasing the quantity offered

for sale. Thus as a result of this both price and the supply of the product goes hand in hand that is
one increase the other also increases and vice versa.
Movement along with supply curve
Like the movement along with the demand curve the movement within the supply curve
also means the relationship between the supplier and the price (Redlich, Moritz and Wulfsberg,
eds., 2018). Hence in case this case price of the product will increase then the supply of that
product will also increase. In the similar manner in case the prices of the product will decrease
then the supply of that product will also decrease. This is particularly because of the reason that
if the prices of the product will be low then the company will not be in position to earn
maximum profit from that product hence they will decrease the supply of that product. Thus in
the same manner as compared to the demand curve the supply curve also have the same
movement along with the same supply curve and this will either increase or decrease the supply
of the product.
Thus with the help of the above graph it is very much clear that the price was 16 than the
supply was 55. Hence when the price decreases to 12 the supply also decreased to 40 which are
referred to as contraction along with the supply curve. In the similar manner, when the price
increased to 22 then the quantity supply increased to 75 which is referred to as extension along
the supply curve. Hence with this it can be stated that when the changes are being undertaken
with respect to the price then there is movement along with the same supply curve.
Shift in the supply curve
A shift within the supply curve is being defined as the changes in the supply of the
product due to the changes other than the price (Mamoon, 2017). This simply means that the

change within the price does not affect the supply of the product or the service. Hence when the
change within the supply of a product is caused due to factors other than price then this is called
shift within the supply curve (Buechner, 2018). There are many different factors which causes
shift in the supply of the product of the services and these are as follows-
 The major factor which can cause a shift within the supply curve involves the the natural
conditions. This involves the natural changes like the rainfall floods drought earthquakes
and other natural calamities which can affect the production adversely. hence in this case
the prices of the product will increase but the supply of the product will not increase due
to the natural calamities. Hence in this case the law of the supply does not work because
even if the same price is there or there is an increase in price but the supply of the product
will not increase.
 Along with this the technical progress can also affect shift within the demand curve. This
is particularly because of the reason that if there will be technological progress then this
will result in increase in the supply of the product. And this is irrespective of the prices of
the product. That in case if the technology used to produce the product is very good then
the supply of that product will be very frequent. Even in case the price is increased or
decreased it will not have any major impact over the supply of the product. This is
particularly because of the reason that I'm there is good technology being used for
producing the product and this will result in effective supply of the product. Thus
changed within the price will not affect the technological advance product supply.
 More over another major factor other than price which can affect the supply of the
product is the transportation improvements. This is particularly because of the reason that
if there is improvement within the transportation then the cost of transporting the material
from one place to another will decrease. And as a result of this the supplier will become
fast and effective. Thus in these condition even if the prices of the product are decreased
or increased then this will not have any impact over the supply of that product. This is
particularly because of the reason that due to good transportation the product will be
supplied to the desired place on time (Makowski and et.al., 2017).

With the help of the above diagram it is clear that at the level price 3000 the quantity
supplied refers to a great extent. The initial supply curve states that at the level 3000 price the
quantity supplied is 5 denoted by SS supply curve. Further it highlights the fact that the quantity
supplied increased to S1 that is 6. In addition to this the supply curve also shifted towards in
word that is a decrease in the quantity supplied was seen up to level 4 denoted by SS2 graph. But
at the entire three supply curve the price of the product was constant that is 3000. In this simply
means that a shift within the demand curve is not caused because of the change within the price.
TASK 2
Comparing and contrasting between the emerging theories and models in 21st century
contemporary economics theories with the 20th century and relating both with the modern
business
There are many different economic theories which are accepted for the business in order
to make the strategies. There are many emerging economic theories and models relating to 20th
century and 21st century. And all these theories and models are assistive to the businesses in
order to manage their operations in proper and effective manner. This is particularly because of

the reason that if the economic theories are being applied in effective manner then this will
improve the working efficiency of the business to a great extent. Thus it is very essential for the
business to effectively make use of the combination of both the theories of economics belonging
to 20th and 21st century (Dean and et.al., 2020).
the neoclassical economic theory is based on 20th century theory. This theory emerged
around in 1900 in order to complete the early theories of classical economics. The classical
economist assumes that the most important factor within products price is the cost of production.
This is particularly because of the reason that the cost of the production only makes up the price
of the product of the service. But the neo classical economist argued that the customer’s
perception of product volume is the driving factor in h price. This is pertaining to the fact that the
preference of the customer is also added within the price of the factor and because of this only
they are derived towards the consumption of that product. the assumptions of neoclassical
economics states that the utility to consume worm is the major preference and not the cost of the
production for determining the value of the product of the service. This approach was developed
within the period of late 19th century and is based on a book by William Stanley jevons and Carl
Menger and Leon walras. In addition to this the neoclassical economics theory believes that the
customer’s first concern is to increase the personal satisfaction. Hence they make their
purchasing decisions based on the analysis of the necessity of the utility of the product for them.
In case that practice of utility with to the customers then they will definitely buy that product at
any cost or price. in addition to this the new classical economist also stipulated the fact that
product of the service often has some value which is above the production cost. On the other
hand the economic classical theory is to assume that the product value can only be derived with
the cost of the material and other labour only.
On the other hand the theories of 21st century that is Kinjal economic theory states that
the total spending within the economy and its effect over the output inflation and inflation. This
theory advocates that increase government expenditure and lowering down the text can stimulate
demand and pull the global economy out of depression. This is particularly because of the reason
that in case the government will increase the expenditure and will try to decrease the taxes then
this will increase the demand of the product and as a result of this the economy will not face the
issue of depression (Blatchford, 2021). The major principles within the engine theory is that
price is rigid and the because of this the major component of spending include consumption

government expenditure and the investments. Thus in case the government spending will
increase then all the other spending components will remain constant and as a result of this the
output will increase.
CONCLUSION
The above report highlighted the fact that business economics is a field that is related to
applied economics and undertakes the use of different types of economic theories and other
methods. The current report highlighted the fact that movement along with demand curve is due
to change within the price and shift is due to other factors like changes in taste and preference of
consumer. Further it highlighted the fact that law of supply also worked in the same sense as law
of demand. The shift in supply curve is due to changes in price where is the movement it along
with the theme supply curve is due to factors other than price.

REFERENCES
Books and Journals
Acs, Z.J., and et.al., 2018. Entrepreneurship, institutional economics, and economic growth: an
ecosystem perspective. Small Business Economics, 51(2), pp.501-514.
Blatchford, R., 2021. The Living Wage and the Law of Supply and Demand. A Letter to the
Colliers. In British Trade Unions 1707–1918 (pp. 373-386). Routledge.
Brenner, B., 2018. Transformative sustainable business models in the light of the digital
imperative—A global business economics perspective. Sustainability, 10(12), p.4428.
Buechner, M.N., 2018. A comment on the law of supply and demand. Journal of Philosophical
Economics, 11(2), pp.67-80.
Chang, C.L., McAleer, M. and Wong, W.K., 2020. Risk and financial management of COVID-
19 in business, economics and finance.
Dean, E., and et.al., 2020. Demand and Supply at Work in Labor Markets. Principles of
Economics: Scarcity and Social Provisioning (2nd Ed.).
Makowski, M., and et.al., 2017. Profit intensity and cases of non-compliance with the law of
demand/supply. Physica A: Statistical Mechanics and its Applications, 473, pp.53-59.
Mamoon, D., 2017. Economics case study: Harvard Business School pedagogy techniques: From
teaching entrepreneurship to influencing business policy through research. Turkish
Economic Review, 4(3), pp.290-300.
Redlich, T., Moritz, M. and Wulfsberg, J.P. eds., 2018. Co-creation: Reshaping business and
society in the era of bottom-up economics. Springer.
Tien, N.H., 2019. International economics, business and management strategy. Dehli: Academic
Publications.