Economics for Business: Analysis of Consumer Retail Demand and Policy

This report, titled "Economics for Business," delves into the dynamic changes within the consumer goods industry, analyzing their positive and negative impacts. It explores the factors influencing demand and supply curves, drawing upon various economic theories. The report highlights governmental and economic policies implemented in the UK to mitigate negative effects, such as retail subsidies and stimulus packages. Task 1 examines factors affecting consumer retail demand and supply, including the laws of demand and supply, the impact of income changes, and the role of complementary and substitute goods. It also addresses demographic shifts and government subsidies. Task 2 focuses on UK government policies designed to stimulate economic recovery from decreased consumer retail spending, including stimulus packages and industry-specific measures. The report provides a comprehensive overview of the economic landscape, offering insights into market dynamics and policy interventions.

Economics for Business

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................4
TASK 1......................................................................................................................................4
Factors impacting consumer retail demand and supply.........................................................4
TASK 2......................................................................................................................................9
UK governmental and economic policies implemented to aid economic recovery from loss
of consumer retail spending...................................................................................................9
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................13

Executive Summary
This report is on the theme "Economics for Business" which states about the current
changes which can be found in the consumer goods industry having both positive and
negative effect. The report gives a clarification about the different components which has
come about into move in the demand and supply curve on the lookout. The report draws
consideration towards different hypotheses of financial aspects. In light of the discoveries,
there are distinctive legislative and monetary strategies which are being forced to control the
circumstance and diminishing the negative effect of it over the business, for example, giving
retail subsidies, stimulus packages, industry-explicit measures, etc.

INTRODUCTION
Economic matter for business is considered as the field of applied financial aspects
which includes the investigation of monetary, industry and market related issues which is
being went over an association. It considers different variables having an impact over the
adjustment in the interest and gracefully of the item on the lookout. Financial depends on the
different standards, for example, asset shortage, opportunity cost, marginal decision taking
and gain from exchange, market balance point, asset and market productivity, government
intervention, spending versus pay and limitation on production. Every one of these variables
are considered for analysing the economic situation. This report gives investigation of the
variables having a positive or negative effect on the entire demand and supply chain of the
buyer retail demand and expenditure because of coronavirus alongside the reaction of retail
market on it. Alongside this, it covers the UK administrative and monetary strategies that
could have an effect over the stimulating the demand and supply of retail consumer goods in
UK.
TASK 1
Factors impacting consumer retail demand and supply
There are numerous hypotheses relating to the economic aspects however the main
speculations which are significant for understanding economic terms are the law of demand
and supply. The law of demand characterizes that as the cost of the item builds, the less
individuals will request that item which consequently leads to decrease in the interest of that
item. The proportion of an item that buyers purchase at a more noteworthy expense is less
considering the way that as the expense of an item goes up, so does the opportunity cost
relating to the buying that item. Hence, people will typically make an effort not to buy a thing
that will constrain them to manage without the usage of something other than what's expected
they esteem more. In the comparative manner, the law of supply, shows the sums that will be
sold at a particular expense. Regardless, as opposed to the law of demand, the supply curve
relationship shows an upward slant. This suggests that the higher the worth, the higher of the
amount of the item being supplied. From the seller's perspective, the opportunity cost of
every additional unit that they offer will all in all be always more prominent. The producers
of the goods will supply greater amount of the item at a more noteworthy expense
considering the way that the higher selling cost legitimizes the higher opportunity cost of
every additional unit sold.

Economics matters is also considered as the sociology yet it has been censured that by
certain creators identified with that field that economics matters misses the mark, in regard to
meeting up with the meaning of science because of the assortment of the reasons, for
example, the absence of agreement, political factors, etc. Yet, even after the contentions, the
economics shares certain components which are normal to sociology regarding quantitative
and subjective (Krugman and Wells, 2017). The social science in the like manner uses
different quantitative instruments used in the ordinary sciences to graph and get designs. For
example, monetary pros use estimations and mathematical hypotheses to test speculations and
estimate floats, a cycle known as econometrics (Is Economics a Science? 2020).
Additionally, various social science specialists use studies and other resolute assessment
methods to choose the patterns and offer thumps up to the future practices.
Fall in income and loss of employment
During this difficult stretch, numerous individuals lost their employment, private
companies just shut down which has influenced the profit of the individuals, and this
consequently resulted into decrease in the extra cash alongside the interest of the buyer retail
items. This can be outlined with the assistance of the underneath diagram. Under the both the
chart there is a movement in the demand bend which is on the grounds that as the pay falls or
if there is increment in joblessness, the demand for the item lessens due to money crunch.
Accordingly, the principal figure shows the effect of fall in pay on the demand of the
ordinary goods as the demand curve shifts from D1 to D2, an internal move in the curve. The
figure 2 expresses that because of decrease in the ordinary merchandise there is an expansion
in the requests of the inferior items. However, in both the cases the supply stays as before or
there may be little decrease in the supply too.
Q1Q2
S1
Income
C
A
B
D
2
D
1
Q1Q2
O
I
2
Quantity
Figure 1
I
1I2
I1
S1
D1
D2

Complementary or substitute goods
The restricted accessibility of the items has come about into increment in the cost of
the items. Along these lines, under the circumstance of substitute products the expansion in
the cost of one great has influenced the demand for another item which is corresponding to
one another like bread and butter. In the event of substitute great, there is increment in the
demand of the substitute products due to the expansion in the cost of ordinary merchandise.
The beneath diagram portrays it clearly.
S
1
D
1
D
2
Income
I
1
I
2
Quantity Q1 Q2
P
1
P
2
S
S
S1
D1
D2
I2
I1
P2
P1
S
D
Quantity Q2 Q1
Increase in demand of
substitute goods

UK population and demographics
The rise of coronavirus has come about into significant move in the populace and UK
is worst hit by this pandemic. This transformation period has caused the fast segment change.
The development of individuals has decreased, for example, the extent of the grown-ups in
UK who have gone to work between the time period of 28 October to first November 2020 is
declined by 3% rather than the earlier seven day stretch of 56%. Individuals who have
telecommuted and haven't worked or voyaged are at a similar level. Thusly, this has
influenced the interest of the items in light of lower pay and no work.
Government subsidies
The government subsidy is the sum which is being given by the public authority to the
organizations to support creation and utilization of the retail merchandise on the lookout. The
UK government has forced a permitting strategy with the goal to stimulate the demand and
supply in the purchaser retail market. This has come about into move in the supply curve
bend descending alongside the measure of appropriation. Under such circumstance, another
supply curve bend corresponding to the first will be there. Contingent on the versatility of the
interest, its effect will be diminishing the cost and the rise the yield level. As per the
hypothesis of economic incidence, the appropriation shows who has adequately exploited
subsidy. Furthermore, then again, the lawful incidence, shows that the sponsorship is
proposed to offer help.
Income
C
A
B
S
1
D
2
D
1
O
I
2
I
1
Quantity Q2 Q1
I2
I1
S
D1
D2

The value that the shopper pays doesn't diminish by the complete sum concerning the
subsidy, yet all things being equal, it reduces to P1 from point P. The aim of the subsidy is to
limit the value that the shopper is needed to pay. Also, the maker gets the favorable position
regarding extra income. The addition of the purchaser is P-P1 per unit of the item while the
entire increase is PFBP1. The increase brought about to the maker is C – P per unit and the
total addition is CAFP. Thusly, the general cost that the public authority is needed to bring
about for subsidy is the zone CABP1.
F
Q1Q
Q1
Benefits to producers
Benefits to consumers
B
F
S
S + subsidy
P1
P
D
Q
P1
P
C
S1
S
D
O
O
A

TASK 2
UK governmental and economic policies implemented to aid economic recovery from loss of
consumer retail spending
The volume of fundamental food products purchases rose firmly not well before
lockdown on 23 March and volume bargains were until now higher than at a comparative
point in 2019. Since lockdown began, clients have made less excursions than in a comparable
period a year prior yet have been buying more per trip. Changes in food usage can be more
commonly recognizable among the more youthful age get-togethers, families with
adolescents and the people who were self-isolating (Coronavirus and the impact on output in
the UK economy: July. 2020). About segment of the 16-to 34-year-olds changed their food
use structure among April and June while the proclivities for most of the more settled age
groups remain unsurprising. Along with it, there is a new trend pertaining to cooking food
from 0 base level and having it with the family members and friends all together, yet likewise
a checked extension in regard to eating, especially in the month of April and May. This has
affected the consumer and retail business in UK for an enormous scope.
Despite monthly growth of 1.0%, the food products investments were 3.6% more
delicate in July month as compared to the month of February 2020, with the other food things
grouping the hardest hit since the start of the pandemic. Only four of the eight sub-
organizations inside this region rose, highlighting the blended picture for month to month
development, with the most striking climb in meat things (3.6%). In light of the respondent-
drove verification that the continuing of the food organizations territory during July (for
example, bars, diners and bistros) emphatically influenced interest for food things.
Elsewhere, there were report of negative coronavirus effects on the food related industry. A
couple of responders that saw extended demand from the "panic buying stage", recognizable
in markets during the month of March 2020, have seen turnover re-appearance of customary
levels throughout late months, while others, especially those giving the items to the
accommodation segment, have seen a fall in regard to demand of their things.
Stimulus package
There have been arrangements made by the government in the form of
implementation of the stimulating packages in the retail sector basically with the aim to
revitalise the demand and supply in the business areas which are really hit by the pandemic or
the social distancing strategy. It likewise includes giving assistance to the individuals who
lost their positions and are jobless (The government’s post-Covid 19 stimulus package. 2020).

The public authority of UK has assessed the expense relating to the stimulus bundle which
additionally incorporates 'Plan for Jobs' and this would cost almost £30bn which is a huge
sum however lower than the bundles being reported by different countries. This activity
includes the entire or complete govt. spending for supporting the whole economy in this time
of emergency is £190 billion or 9% of GDP. Of this sum, £5.6bn is separated for the
infrastructure expenditure and it has been accepted that this figure will take up 100% of the
£1000 work maintenance grant which is being offered to the businesses for bringing back the
staffs. On 8 July 2020, the UK govt. announced that it would introduce a brief 5% lessened
pace of the VAT (Value Added Tax), which would impact associations around there. Food
and beverages organizations saw a 99.0% advancement in July 2020 yet remained 58.7%
underneath in the month of February 2020, with most of the impact from more allure from
associations that had returned or were intending to continue, yet the overall yield level
remained less powerful or strong.
Retail subsidies
The UK government has additionally declared a progression of measures to help the
organizations within the consumer and retail area to trade items abroad which is separated of
the measure for helping the area improving from Covid-19. It will give prompt help to the
associations through the method of guaranteeing that the specialists offering guidance on the
various points, for example, the online retail including the abroad commercial centre. Aside
from this, the public authority has thought of the grants too. The organization’s inside the
retail, consumer goods industry is entitled for financial grant of up to £25000 from their local
regulatory authorities (Coronavirus grants for retail, hospitality and leisure businesses.
2020). For being qualified for the govt. grant, the business ought to be situated in UK in the
recommended area and should have rateable value within £51,000 as on 11 March 2020. In
the event that the rateable estimation of the business is equivalent to under £15,000, at that
point the sum that is destined to be conceded is £10,000 (Support for businesses and self-
employed people during coronavirus. 2020). Then again, on the off chance that the worth is
more than £15,000 and lower than £51,000, at that point the organizations would be qualified
for £25000. As indicated by the most recent report, government has paid more than £16
million to more than 1,000 organizations from April month.
Industry-specific measures
There are certain industry specific measures are also undertaken by the government
such as "Consumer and Retail Export Academy" has been established which furnishes the
retailers or the organizations with the changed information and comprehension and abilities

needed to address with the issues of the exports. This arrangement will plot the longer-term
help to the area as the new opportunities will arise as a result of the economic alliance being
undertaken with different countries, for example, US and Australia. This foundation will give
information on computerized learning, online courses on the customer and retail focused by
the DITs online sites. It will likewise incorporate an instructing program alongside a broad
library which will give data on the business explicit (Bounce-back plans launched for
consumer and retail industry.2020). Another activity is the "International Clicks Fast Track
Initiative" in which the admittance to the new DIT associations and arrangements from B2B
commercial centres has come about into increment in the courses to advertise the store
terminations due to the Covid-19. Alongside this, the omnichannel optimiser activity has
been attempted in which taking guidance for the organizations will help in making an abroad
multi-divert plan to help the online business. Leading a specialist driven online class with the
motivation behind furnishing the exporters with the information relating to the e-commerce
business and how they can make the most of computerized openings which has made its way
from the emergence of Covid-19 pandemic.
Government transfers
In terms of government transfers, the UK central bank is considered as the first bank
in regard to adopting the direct financing for the purpose of acquiring funds for the
government spending during the time of the global pandemic. In reference to it the Bank of
England has also stated that it is going to expand its overdraft facility which is called as the
Ways and Means facility in regard to offering funds to the UK government in response to the
Coronavirus. The bank of England has also established an indirect financing pertaining to the
treasury through the way of quantitative easing programme.
CONCLUSION
It can be summarised from the above that the Coronavirus has affected the retail area
radically which has impacted the development of the economy on a general premise. The
effect has been examined with the assistance of the outlines like demand and supply as per
the different variables which has been affected because of the pandemic and how it has
impacted the purchasers spending power and over all the retail market. This includes, income
level of the consumers, joblessness, related products, etc. Finally, the different arrangements
and projects which are being actualized by the UK government to quicken the interest and
flexibly of the retail purchasers’ products alongside meeting with the or defeating the

negative effect of COVID-19 on the customer retail spending and the misfortune which has
been caused to the business in the retail area.