Examining Demand & Supply with 20th & 21st Century Economic Theories

This essay provides a detailed analysis of demand and supply, explaining the law of demand and supply with relevant diagrams and examples, particularly focusing on Tesco. It examines factors influencing demand and supply, such as price, consumer income, substitute goods, production costs, and government subsidies. Furthermore, the essay compares and contrasts emerging economic theories and models of the 21st century with those of the 20th century, relating them to modern business practices like the Neoclassical Growth Theory. The study highlights the importance of understanding these economic principles for effective business management and decision-making.

Contemporary business
economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1.1 Law of demand with demand curve and changes in the demand curve by using diagram...3
1.2 Explain the law of supply, movement along with the supply curve and also explain change
in supply curve with suitable diagram........................................................................................6
TASK 2............................................................................................................................................9
2.1 Compare and contrast emerging theories and models in 21st century contemporary
economics with those of the 20th century, and relate both of these to modern business
practices.......................................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business economics is the concept that involves the fundamental studies about the
financial management in market that are linked with the environmental problems that are faced
by management. It also deals with the concept of deficiency of the resources and maintain that
how they can be efficiently use (Benuyenah, 2021). The management consider in this report is
Tesco. It is a multinational supermarket in the United Kingdom that was founded in the year of
1919. The following project covers the law of demand and supply that are explained and also
evaluate several changes that follows in demand and supply. Hence, it also follows the theories
that are increasing in 20th an 21th century in contemporary world.
TASK
1.1 Law of demand with demand curve and changes in the demand curve by using diagram
The demand is an aspect that define individual's desire to purchase specific goods and
services. They have the willing to pay price for that specific product in large market (Buigut,
Kapar and Braendle, 2020).
According to the law of demand there is an inverse relationship between price of the
goods and a particular quantity of goods as they remain constant without any change in other
factors. For instance, it the price of any goods increase from the p0 to p1, then it show demand of
the commodity fall down from the q0 to q1. It reflect that the customer only purchase goods
when its price is low and get what they are pay for the given goods. In context of Tesco, if the
price of its olive oil is rise then its customers will not purchase the olive oil and mover to other
brand or commodity.

According to this diagram, it is reflected that with the sloping of demand curve
downwards,, the price of given commodity increase from the p3 to p2 that effect a decline in the
commodity's demand at market place from the Q3 to Q2 and move to q3 or vice versa (Kalbasi,
Shahsavar and Afrand, 2020).
The factors effecting demand of particular commodity are given below:
 Price of the substitute goods- In this, the goods can be replaced by the another goods
and having an inverse relationship. The demand of a goods is also impacted by the price
of other goods as substitute. For instance, when the price of olive oil tend to decline then,
de mad of such commodity tend to a rise or vice versa.
 Price of the complementary goods- In this, the goods are consumed as the conjunction
of other product. If the price of goods decrease then quantity demand of on increase with
the demand of other. With increasing in the price of pasta demand of the olive oil fall
down (Masarek, 2019).
 Number of buyers in market- If there are few number of consumers in market then it
impact the demand of product it will lead to low level of demand. Whereas if there are a
large number of customer then there is a high level of demand. In case of Tesco, more
buyer lead to high demand of its product in retail market.

 Price of commodity- When the price of given goods tend to increase then demand for
the same product will be fall down because the customers will shift to an affordable
products in market. If the price of given commodity fall down then demand for this
product tend to increase. In context of Tesco if the p[rice of its olive oil rise then the
potential buyer will shift to other brand and if it lower its price the it can attract more
customers.
 Income of consumers- The demand of a consumer also effected by the level of his
income. It is natural that if the income of a consumer will increase then the demand of
goods also will be increase. In case of Tesco, with the increase of its customer's income,
their demand will also increase for olive oil.
 Taste and preferences- A fashion, taste and preferences of a consumer continuously
changing with his demand. if the customer of Tesco are liking to olive oil then demand of
this product tend to rise. If they are not liking this product the it will lead to a decline in
its demand (Pampel and et. al., 2019).
 Change in future expectation- It is related to the overall product's supply in near future.
If the potential customer expect a shortage of given commodity, then demand for the
specific product will be increase in current market so that they can have that product in
the sufficient quantity. For example, if the price of given commodity tend to rise then its
supply will has major implication of different product in target market
Change in demand curve
In this, it is variation in entire demand curve which is caused by the change in different
factors including change in customer's income, product's price, change in taste and preference of
consumers and a change in overall price of commodities. Due to this, there will be a shift in
demand curve from right to left (Schmidtke and et. al., 2020).

According to this diagram, it implies a shift in entire demand curve that lead to a shift in
right when the demand increase due to the decline in product's price in large market. On this
basis, initial demand curve will d0 but because of price changing for say if price of commodity
tend to increase or fall in case of demand curve will be shift from d1 to d2. Hence, there is major
effect of different factors which include price of the substitute goods, customer's income, future
expectation of buyers and the taste or preferences of buyers.
1.2 Explain the law of supply, movement along with the supply curve and also explain change in
supply curve with suitable diagram.
Supply is considered as the fundamental term that are managing the global availability of the
goods for furthermore sales to their efficient purchasers in the market. It is relates to the
particular price of the goods in the area of the targeted market on the basis of graph.
Law of supply -
The law of supply will termed to the positive dealing between the amount that are supported and
the price of the goods in the field of larger marketplace and other components will termed to be
constant. When the price of the products that also increase by the supplier as they might like to
sell their products at effective cost by which they can ensure efficient term of productivity in the
marketplace (Bylund, and Packard, 2021). In context to the Tesco, when the price of the olive

oil tends to increase then the supplier will maintain higher amount in order to have effective
number of profit in an effective and efficient manner.
In the above figure, it has been demonstrated that the supply curve is maximising and by
managing positive dealing between the price and the amount that are supplied of the present
goods in larger field of marketplace. As according to above diagram, when the price of the goods
was at Q3 but with the changes in the price of the social trade that require to increase the price of
the goods from P3 to P2. It shows the higher level in the supply of the goods from Q3 to Q4
supplier that also increase the supply as effectively and efficiently.
Factors affecting supply of the particular products that are discussed below -
 Government Subsidies – By increasing in the government subsidies that also led to
decline the cost of the goods (Castañeda, and Williamson, 2021). By this, when the price
of the subsidies maximise then the supply of the commodities that will also increase. It
context to the tax rates that can also decline the supply of the current goods and the
facilities.
 Costs of production - In the current organisation, they can offer various sections of
production that can also have effects by lack of the demand of raw material and low
income of the candidates. When the cost of production tends to decline so it will led to
decline the global cost of the products and the facilities. In context to the Tesco, when

they have sufficient raw material then it will also decrease the global supply of their
goods and the services .
 Technology - It is related to the innovation or the development in the technologies by
which the business that can effectively decline their functioning cost in an effective and
the efficient term of the manner. It is major term by which they can use the creation and
the techniques. At the time of management that are maximising the techniques that also
led to increase the supply the goods by declining in the overall price of the management.
 Weather – The products that have direct impact on the profitability of the management.
Tesco is the retailer management and there higher impact of the weather on the goods in
the current management (Fuchs, and et.al., 2021). In order to have an efficient products
the organisation that should also understand its impact of the weather on the overall
profitability of the management.
 Objectives of firms – When the management is presenting with the individual target of
creating higher term of profit then they sale their products at effective amount. But when
the management have consideration of performing social advantages then they only deals
with selling of their products reversely of their price and the cost dealing.
 More firms - By increasing term of issues in the marketplace, there are major effects of
management that are offering efficient products to them and ensure that they also provide
effective profitability of the business. When there are declination in the price of the
products then the supply of the current goods tends to minimise the level.
Change in Supply Curve -
It is termed to the shift in overall supply by having changes in various factor that also
have effects on overall supply of the current goods (Kwarteng, and et.al., 2021). It include taxes,
production cost and technologies. If the supply of the goods tends to maximise then the supply
curve will change from S0 to S1. As when the supply of the goods tends to decline then the
supply curve will change from S0 to S2.

As per to the present figure, when the presented price of the commodities tends to
increase then the supply of the goods will also raise. It will present that the supply curve will
change to S to S1 and the price of the goods will decrease the supply of particular goods that will
decline that will get minimise by lower price in marketplace.
TASK 2
2.1 Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these to modern business practices.
As there are various sort of the theories that are existed by the economist that are current
in the 20th and 21th century and all the business are using various theories are as follows - Neoclassical Growth Theory – It is an economical theory that involves economical
growth of the business and they have accumulation of three factors like technology,
capital and labour. Economists have demonstrated that the credit of advertising the longer
run economic growth in 1956 as per to the national bureau of Economic Research. It is
the theory that termed the short term activities that also have outcome from different
section of labour and capital in their production (Sapta, MUAFI, and SETINI, 2021). It
is one of the theory that have higher number of capital and labour in their production.
This theory also follows the variations that have essential role in the growth of economy
and there is no development when the business is not using techniques of the production.

It will relates to the short-term section that are exist in different section from effective
period of time. It is the theory that have the collection of the capital of economical way
and the manner that how the person are using capital of economy and the way that how
the person are using capital by which they can ensure the technological develop as well. Marx's Social Economic system – It will relates to the theory that existed by the
economist, Karl Marx about the capitalism and as well as communism. As they were
encouraged with the classical, political and the economist such as David Ricardo who
have presented their own key terms of the economics (Sarif, 2021). They have managed
with the commodities that are the collection of two basic and standardised classes like
capitalist in which they understand that economical and social system will be helpful in
the modern class. Capitalist are the business owners who generally manage the process of
production and responsive nature for various divisions that are being managed by the
individuals of the certain production division. As on the other hand, it include tolls, raw
material AND factories that are listed to have higher term of the profitability and
productivity in the business.
 Keynesian Economics theory – It will relates to the goods that have the assumption of
their price and the wages that are effective as according to their aspects that also maintain
the criteria of the economical and social work with dynamical environment (Shaheen, and
et.al., 2021). As there are three sort of the components that are aggregated demand, price
and the salary that present the use of certain resources in an effective manner that will led
to have enhancement in the business in wider term of the marketplace.
CONCLUSION
From the above report it is find out that, the demand and supply are those important
factors that ensure high level profitability and flow of the goods and services in large market.
The supply has a positive relationship between price of goods and quantity supplied of a
particulars commodity as the price enhance overall supply of commodities tend to rise or vice
versa. The demand is an essential element that have an inverse relationship between price and
demand because the price rise then the demand of specific product tend to fall down according to
the above diagram. Further more, there are different theories Keynesian, Marx's social economic

system and the neoclassical theory that are rising in 20th and 21th in order to contribute in the
development and growth of a business efficiently.

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