Economics for Business: Demand, Supply, and Governmental Policies

This report provides an executive summary and analysis of economic concepts relevant to the business world, specifically focusing on the retail sector. It delves into the principles of demand and supply, exploring the factors that influence them, such as tax policies, production costs, substitute goods, technology, and the number of suppliers. The report presents data illustrating the relationship between price and demand, and price and supply. Furthermore, it examines UK governmental and economic policies designed to support the retail sector and stimulate consumer spending, including poverty programs, government transfers, and stimulus packages. The report aims to provide a comprehensive understanding of how economic principles impact business decision-making and market dynamics, particularly within the UK retail landscape.

Economics
For
Business

EXECUTIVE SUMMARY
The report is all about importance of economic concepts into the business world. As it
considers demand and supply in this, demand refers to buyers wants to purchase goods and
services and supply refers to availability of goods and services in the market. there are
various factors that affects demand and supply such as technological changes,
complementary and substitute goods , climate changes, government policies and income
level. UK government provides some packages and transfers to retail sector in order to
influence buyers spending.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................5
TASK 1............................................................................................................................................5
Analysis of demand and supply and factor affecting them:........................................................5
TASK 2............................................................................................................................................9
UK governmental and economic policies to aid economic recovery from loss of consumer
retail spendings:...........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Economics for business looks at principle of economics those are apply in the real world
of business. It is the process involved in managerial decision making. It will helps managers in
critical decision making for activities runs in an organisation. Economics is all about how a
society uses available resources for production and uses of goods and services. It is about how
business approach pricing strategy, evaluate market demand , market supply and factors that
influence a business. This report is based on retail sector in which economic factors affects the
retail goods or services. This report covers topic such as demand and supply analysis and factors
influencing demand and supply. Apart from this it also covers topic such as Governmental and
economic policies run by UK so that it can influence consumers spending.
TASK 1
Analysis of demand and supply and factor affecting them:
The supply and demand, economic, relationship between the amount of goods that
manufacturers wish to sell at different prices and the price that consumers wish to buy. It is a
prime example of the pricing used in economic thinking. The price of an asset is determined by
the interaction of supply and demand in the market. The emerging price is called the equity price
and represents the agreement between manufacturers and consumers of good. In equilibrium the
value of the product provided by the producer is equal to the value required by the consumer.
Demand analysis, It is a process in which managers make decisions regarding production, cost
distribution, marketing, asset holding, pricing, etc. Or, how much a company produces depends
on its production capacity but how much it should try to produce depends on the potential
demand of its product (Change in demand curve, 2018). The requirement indicates the
relationship between the two economic variables, the price of the product and the quantity of the
product that the consumer intends to purchase in a particular period of time, other factors being
equal.
Increase in demand-

Demand and Supply analysis 2020
(Source: Change in demand curve. 2018)
From the above diagram, it is interpret that demand for the product and services
increases. The demand curve D shift to D1 which show that there is negative relation
between price and the demand because when price increase demand decrease. Increase in
demand is happening mainly through various factors which is discussed below.
Decrease in demand
Demand and Supply analysis. 2017
(Source: Demand and supply analysis, 2017)
From the above diagram, it is interpret that demand for the product or service is decrease
and price increase which state that demand curve D shift to D2 because there is negative relation
between quantity demand and price (Demand and supply analysis, 2017). Decrease in demand is
happening mainly through various factors which is discussed below.
Factors affecting demand analysis:
 Change in tax policies of UK: change in tax policies will directly affects the price of
goods and services. As in UK tax rates are increases that leads to change in price and

effects on demand by decreasing manner. As if the prices are decreasing it leads to
increase in demand (Krugman and Wells, 2017).
.
 Change in the cost of production: If the cost of raw material is increasing and decreasing,
it leads to change in demand. If production cost of goods or services increase than
suppliers will increases the price of that product and it leads to less demand in market.
 Change in price of substitute goods or services: substitute goods refer to another
alternative from one good. For example, tea and coffee, if the price of tea are increasing it
leads to increasing in demand of coffee and vice versa.
 Change in technology: change in technology will directly effects the demand of retail
goods and services. As in today’s time people wants updated things and easily move to
another goods and services that has updated according to latest technology.
 Number of suppliers in the market: If the suppliers are more in market buyer has to power
to switch the brand and it directly affects the demand of goods and services. Even when a
new goods comes into the market it leads to downward pressure on price.
Price Demand of goods
and services
20 2
15 4
12 5
8 7
4 8
As per above data it shows demand for goods and services in retail sector. This shows
relationship between demand and supply that it has negative relation. When price is
higher then demand is lower and when price is lower then demand of goods and services
is higher. According to this when the price is 20 it refers demand is 2 and when the price
is 4 demand is increases by 8. As it refers that as prices are decreases demand of the
goods or services are increasing. Consumers go with less price products with the brilliant
quality.
Supply analysis, Offering is a basic economic concept that describes the total amount of a
particular benefit or service available to consumers. The sale may relate to the price at a given

price or the value of the price list if shown on the graph (Change in supply. 2020). This is closely
related to the need for profit or service at a specific price; everything else is equal, the supply
provided by the manufacturers will increase if the price goes up because all the firms are looking
to increase profits.
Increase in supply
Change in supply. 2020
(Source: Change in supply. 2020)
From the above diagram, it has been interpreted that there is positive relation between
price and the supply. If the quantity supply is increase the price is also increase but due to some
factors price is decrease in some case. The supply curve shift from S to S1. Increase in supply is
due to many factors which is discussed below.
Decrease in supply
Demand and supply factors. 2020
( Source: Demand and supply factors. 2020)
From the above diagram, it has been interpreted that there is decrease in supply with
increase in price which is happen due to some factors like change in technological factor and

climate changes; there is leftward shift from S1 to S2 which states that decrease in supply
(Demand and supply factors. 2020).
.
Factors affecting supply analysis:
Regional factors and Local supply factors:
Regional factors that affect the supply factor in UK are Population, Subsidies etc increasing
population leads to increase in supply of different items along the country and subsidies do the
same as it encourages people to purchase goods that lead to increase in supply.
UK population and Demographics:
Demographically UK is a very large country with a lot of people belonging to different countries
living in UK the supply of goods automatically increases to fulfil the needs of the people of the
residing in the country.
Income level:
The income level of the people plays an major role in the supply of goods as the income
increases the demand of goods increases as well it increases the supply power of the producer of
goods in order to satisfy the demands of the people and it also help in producing extra goods as
with extra income they can buy sources to produce goods.
Purchasing Limit and government subsidies:
Purchasing limit of the people increases with the subsidies provided by the government as it
lower down the prices that will surely increase the supply of goods and encourage people to
manufacture goods.
Substitute goods and complementary goods:
Both substitute goods and complementary goods plays an important role in the increasing the
supply of goods as if the supply of substitute good is low then the other goods supply will
increase but in case of complementary goods the relationship is direct the supply of both goods
increases directly.
Climate changes:
Climate changes majorly affect the supply of goods in UK for e g: in winter season the supply of
the woollens increases whereas in summer supply of ice cream increases.
Technological changes:

Technological changes lead to betterment in the producing capacity which ultimately end up
increasing supply.
Price Supply for goods
and services
15 5000
14 4500
8 3000
6 2000
4 1000
As per this data it shows relationship between price and supplier as it has positive
relation. It means when the prices are decreases supply of the product are also decreases
and when the prices are increases supply of the products are also increases. According to
this data it shows when the price are 4 supply is 1000 and when the price is increases to
15 supply of the goods and services also increases by 5000. As we can see that as prices
is increases supply also increases.
TASK 2
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spendings:
Government is always giving full attention on retail sector as it is main industry for every
country for growth prospective. In UK, retail sector of pillar of their economy and plays vital
role. Consumer spending in retail decides its future and at the same time necessary to regulate
their behaviour towards retail sector.
There some policies that government follow to increase the spending of consumer in retail sector
are –
Poverty programmes – These programmes were introduced for the development of retail sector
through increment of consumer expenditure in this sector. To reduce the unemployment in retail
sector government, make sure that consumer do regular spending and increase the engagement of
consumer to employer. UK government take corrective measure to prevent these uncertainties
through spreading of awareness and programmes (Government transfer. 2020). As retail is pillar

of UK economy and giving all focus to this not a bad decision, so government try to strengthen
the roots of this market successfully. There is large market that needs to be regulated smoothly
and its growth determine the actual progress of economy. In this schemes government develop
new scheme for the safeguarding the interest of retail company and provide them subsidy,
consumer development programmes, investing in this sector and promote export business.
Government transfer–This is referring to payment made by government to individual through
welfare programs. UK government is also issued some transfer to promote the activities of buyer
to spend on retail sector and maintain healthy environment in market. During this pandemic
situation, government has taken proper policies and steps to restructure the condition of
economy. They invested in this sector so that companies can boost their production and growth
and get back to their original speed and also support local businesses to achieve their goals.
Government invites foreign investment and promote export activities and announces big budget
that will help the retail sector to grow more. Consumer buying capacity has been reduced due to
this lockdown period which effect the many business adversely and require some relief from
government to help them out from this situation, so many welfare programmes and charity
activities has been implemented by them (Stimulus package. 2019).
.
Stimulus Packages – This is provided by government when they anticipated any recession and
depression is coming and will affect the economy of country. It includes tax rebate and incentive
used by them to prevent uncertainties in future an decrease employment and spending in country.
This procedure involves the lower interest rate and inflation rate can lead to increase in buying
power of consumer and more circulation of money in economy. UK government take this step to
improve buying power of consumer in retail sector as they lower down interest rate and gives
incentives to them to buy more. As this pandemic shut down many businesses and make them
suffer from big losses, so government gave tax rebate to different sector and especially retail
sector because this is largest market in UK. Through this, retail sector will enjoy tax benefit and
it directly affect the spending power of buyer because after getting tax relaxation companies can
start offering their product at lower rates and provide offer will attract the consumer to buy
ultimately. So, providing tax benefit and incentives will eventually help in increasing consumer
spending and gives hope to company to regain their businesses profit and growth (Poverty
programme. 2020)

Retail subsidies–Subsidies refers to transfer of specified amount by government. So, it is
provided to help the businesses to recover or help them to revive in their condition. Retail
subsidy is given in order to promote the growth of retail sector, so that they can use the benefit in
operational and production process. In UK, retail subsidies play major role in growth in this
sector where company can use this subsidy properly and will result in cutting in the prices of
goods and services and increase the buying power of consumer. Retail can use amount in
improvement of their business condition and enhance their operational profit through relocation
of amount at right place which directly increase the interaction of consumer through attractive
offers and discount provided by retail company. So, its circular cycle where it starts from subsidy
by government and ends at increasing the spending power of consumer.
Industrial measures: There are various steps a country is taking while recognizing the special
need for industrial analysis and the provision or use of consumer spending in the economy. The
government is focused on improving the community so that they can invest in long-term prices.
The UK Government provides various measures in the retail industry to provide a source of pay
for workers (Industry specific sector. 2020). So that employees can purchase goods or services
and meet their and family needs. In the case of corona virus the government approves various
industry budgets to support them financially. All of these factors have led to consumer
trafficking as it is an important part of life and quality of life which has also increased with every
step taken by the government.
CONCLUSION
From the above report it has been concluded that economics for business involves economics
tools in the real world of business which affects an organisation policy directly and indirectly.
Economics is all about how a society uses available resources for production and uses of goods
and services. It is about how business approach pricing strategy, evaluate market demand ,
market supply and factors that influence a business. Firms uses for analysis of business
requirements economic tools that are demand and supply. Demand refers to buyers desire to buy
a goods and services at a given point of time with specific price. Supply refers to available goods
or services by suppliers at a given price in a particular time period. Government is always giving
full attention on retail sector as it is main industry for every country for growth prospective.
Government and economic policies are the main factors that affect the customer’s spending in

retail goods or services that are poverty programs, government transfers, retail subsidies,
stimulus packages, and industry specified measures.