Contemporary Business Economics: Demand, Supply, Theories, and Tesco

This report delves into the fundamental concepts of contemporary business economics, focusing on the laws of demand and supply. It explains the inverse relationship between price and quantity demanded, and the positive correlation between price and quantity supplied, illustrating these principles with examples from Tesco's operations. The report examines movements along demand and supply curves, as well as factors that cause shifts in these curves, such as changes in income, trends, tastes, and expectations. Furthermore, it explores emerging economic theories and models of the 21st century, contrasting them with 20th-century models like classical and Keynesian economics, and relating these theories to modern business practices. The report emphasizes the importance of understanding economic principles for making informed business decisions and adapting to changing market conditions.

CONTEMPORARY
BUSINESS ECONOMICS

TABLE OF CONTENTS
Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Law of demand, movement along with same demand curve and change in demand curve
with its factors..............................................................................................................................1
1.2 Law of Supply movement along with same supply curve and change in Supply curve with
its factors......................................................................................................................................3
TASK 2............................................................................................................................................6
2.1 Emerging theories and models in contemporary economics of 21st century with those of
20th century and relate both of these to model business practices...............................................6
CONCLUSION................................................................................................................................7
REREFENCES................................................................................................................................9

INTRODUCTION
Contemporary issues in economics vary from nation to nation, but every country wrestles to
varying degrees with climate change, political scenarios, technology and even the human
element behind both labor and consumer spending. Tesco is the British multinational relation
company flourishing in the retail sector specialized in more to way of groceries and general
merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United
Kingdom (Babić, 2018). The company is more way the offering of the retailing, brick and
mortar supermarkets, and a private-label brand of products. In this report, there will be clear
discussion on the Law of demand and supply, movement along with same curve and change in
curve with its factors and Emerging theories and models in contemporary economics of 21st
century with those of 20th century.
TASK 1
1.1 Law of demand, movement along with same demand curve and change in demand curve with
its factors
Law of demand
Law of demand is one of the most fundamental concepts of economics. Law of demand states
that quantity purchased varies inversely with the price or it can also be said that higher the price
of product, lower is the quantity demanded. This mainly occurs because of diminishing marginal
utility. Consumers mostly uses the first unit of an economic good they purchase in order to fulfil
their needs and uses each of the additional goods they purchased to serve successfully lower
valued end. This law majorly focuses on unlimited wants of the customers. majority of times
people prioritize their needs and wants over less urgent ones within their economic behaviour.
This further helps in understanding ways in which people limited means available to them. Law
of demand is one of the main fundamentals of Tesco’s operations of market. That helps in
governing their economies. Within operations of Tesco, Demand in retail sector organizations
like Tesco majorly refers to quantity of products and services that are required by the buyers and
quantity required is the amount that consumers are willing to purchase at a defined price (Hosoe
and et.al., 2019). Tesco set prices of their products and services in such a manner that their
customers willing pay those process and purchase their products and services as per their needs
and requirements. Below graph clearly explains that price and quantity are inversely proportional
1

i.e. when the price is high quantity demanded is lower and when price is lower, quantity
demanded is higher.
Movement along demand Curve
Retail sector organizations like Tesco faces certain demand curve for their goods and services.
There are various kinds of factors that can bring changes within demand of the products and
services and can bring various kinds of movement or changes within demand curve. When there
is change within price of a product there is change within the quantity demanded and other things
remain constant. Whenever change in price occurs, there is a movement within quantity
demanded along the same curve (Hosoe and et.al., 2019). With this it is important to remember
factors like consumers income, taste, choices with price of goods and services as these factors
can impact demand of the product or service other than price.
For example: If Tesco increases price of a product whose demand is less and reduces
price of a product whose demand is higher. These changes will bring movement within demand
curve such as:
Figure 1 movement along demand curve
In the above graph it is clear that price of a product is OP and demand of the product is
OM. When price of the product is increased from OP to OP”, quantity demanded reduces to OL,
Whereas, price of the product is reduced from OP to OP’, quantity demanded of the product
increases to ON.
Change in demand curve with its factors
There are various kinds of factors that can cause change within the demand curve. It is important
for retail sector organizations like Tesco to understand factors because of which change in
2

demand curve occurs. Mostly quantity demanded of a product change due to change in price and
other factors such as income, trends and taste, expectations and many more (Christopher, 2016).
Income: Change in income of consumers can bring changes within demand curve in many ways
depending upon type of goods consumer wants i.e. if the goods required by the consumers is
what they need or are looking for then there is less change within demand curve even if income
of consumers. In normal cases if income of the customers increases then shift in demand curve is
towards the right as higher salary people can afford to pay more price for a product (McConnell,
Brue and Macpherson, 2016). But if income of customers decreases then shift in demand curve is
towards the left.
Trends and taste: When goods or services comes into the category of trend setters or are as
per the taste of the customers then in such cases change in demand curve is towards the right.
Tesco need to continuously analyse and update their products and services and per the changing
trend and taste of the customers in order to increase demand of their product.
Expectations: it is one of the main factors that can bring change within demand curve.
Expectations for future prices of the customers can significance bring changes within the demand
curve.
Figure 2 Change in demand curve because of increase in income of customer
1.2 Law of Supply movement along with same supply curve and change in Supply curve with its
factors
Law of Supply
It is another important and fundamental concept of economies. Law of Supply states that there is
a positive relationship between quantity that suppliers are willing to sell and the price level of the
3

product or it can be said that increase in price will result in increase in quantity supplied. For
example; If Tesco increases price of one of their products then they will typically increase
quantity supplied to the market (Marwala and Hurwitz, 2017). Supply graph is mostly depicted
by upward sloppy graph which is a standard supply graph and is represented graphically because
of law of supply. This relationship between goods supplied and price of the goods is captured
within a graph along with the supply curve to higher price and quantity combination.
Movement along supply curve
Movement along supply curve occurs when there is change in overall price and quantity of the
goods. It is seen that higher is the price of the good, higher is the quantity supplied to the market
of the good (Evans and Mason, 2018). This helps in increasing overall profitability of an
organization like Tesco. The correlation between price and quantity supplied is completely based
upon potential increase in profitability that occurs with an increase in price.
The supply curve has the rightward movement which have been brought up with the effect of
the rise in price of supply which is refereed as the expansion in supply as the movement have
been moving to the lift side towards another side of the respective supply curve (Dhingra, 2020).
The contradictory is the leftward movement is the contraction of supply curve which is tended to
brought up by there fall in respective prices by keeping other things constant. As the prices of
Tesco goods fall, this will be resulted in the less level of revenue per units as supplies is less.
Change in Supply curve with its Factors
As the factor considered, this have been resulted to taken the shift in supply curve as the factor
have the conclusion of the factors which are such as
Interests’ rate and wages-
4

Raw material prices- When the price of input god increase, the firm tends to have the facing of
high level of production cots which turn to supply reduction and less level of profitability. This
have the rightward shift.
Change in respective technology, skill and respective knowledge development- The use of
the increase the production process have resulted in increasing the level of productivity for
making goods and service profitable. This is left ward shift
Expectation- This have the referring to have significant factor for the significant supply which
in relation will affect the supply in significant manner (Greenlaw. and Shapiro, 2017). This is left
ward shift. Hence, factor which are determine their supply other than the respective prices. there
are two type of the shift which is taking place due to change in respective factor of the supply
curve.
The right ward shift has the significant level of because that are such as the fall in the interest,
wage rents, raw material. There is more level of advancement in terms of technology, skill
among the respective workers along with decrease in the corporate taxes include the indirect one
or vice versa resources availability (Heller, 2017). On the other hand, the left shift tends to have
it occurrence in the Tesco company after the all the situation of the factor have been vice versa.
Hence, the supply is never constant over the respective time, it has been observed with
continues increase and decrease along with it rightward and leftward shift.
5

TASK 2
2.1 Emerging theories and models in contemporary economics of 21st century with those of 20th
century and relate both of these to model business practices.
The development of the economic theory is helpful in tracking the benefit and cost which
is providing the opportunity cost. This is considered as the fundamental one in need to be very
difficult to have the different in use without having the theoretical model of the economic
linkages. In addition to the reaction of economic theory have the outlet to be reaches in the all
areas which is based on the rigorous level of theoretical reasoning by analysing the various level
of economic problems (Guan, 2017). Economic and political unions, cooperation and
partnerships represent the ways to ensure the belonging needs of individuals in a society.
In the 20th century, the important level of economic theory which is considered to be the
part of important aspect to understand the economic problem. In addition to that’s their theory
has been developed shortly after the birth western capitalism which are of countries in order to
have the highlighting o the prominent level of development in the classical economic.
This theory has the associated with more level of lassiez free economics which have the idea to
the economy in order work at it best in the situation when the government have the minimal and
no control of it.
As per the consideration of assumptions have the directly towards, he macroeconomic
which have relying if the key level of assumption which have flexible prices and saving
investment. On the other hand, the flexible level of prices has the ensuring to adjust the market to
have adjusting of equilibrium in order to have eliminating the shortages and surpluses. As per
the classical economies have the believe that there is nothing to have the government can do the
help in the uplifting if economy is considered to be the market solution.
On the other hand, Keynesian economics is also considered to be modern economy of the total
spending with the economy with the effects on the output and inflation (Heller, F., 2017
Scott, C., Lundgren, H. and Thompson, P., 2018). This have the theory of firm which have the
consisting number of economies theories by explaining the predict nature of firm. This have the
existence of behaviours, structure and the relation in the respective market in perfect manner.
On the other situation modern approach is the market have the comprising if the serval level of
feature which is emerging todays as the major level of revaluation in knowledge capitals along
with information explosion by looking out to be innovation theory as the inter firm and inter
6

industry diffusion of respective knowledge. In addition to that’s the increasing level of efficiency
in the terms of telecommunication along with microcomputer industry. This have also reflected
in global level of expansions of the respective trade through the modern level of externalities and
respective networks. They have the mainly level of focus on the two respective channels for level
of inducing the respective growth through the expense needed to be sent on research as the major
core component of the knowledge innovation (Evans. and Mason, 2018). In addition to hic the
first channels have the major level of impact on the variable level of goods and services and
other have the impact on the stock of knowledge phenomena. Hence the modern theory is
considered to be more level of variability which indicates that’s the cause and effects are not the
part of simple -phenomena. As the several levels of events are tended to be result of the several
variables which could be their interrelated and interdependent. On the nude theory is the concept
have the behaviour level of science, political theory and the respective behavioural economics
which have the proposing positive level of reinforcement along with indirect level of
suggestions. This is helpful in different way of influencing their behaviour of section making of
different groups and individuals in order to have the achievement of compliance in term of
education, legislation and enforcement. In addition to that’s their theory has the clear resting in
their fundamentals which is irrationality have been the parts of the human being by stating that
people are considered to be sometimes incapable of taking the respective decision (Christopher,
2016). The theory tends to have the attempt by giving the people a little level of nudge by the
bets practices in the areas of public policy, marketing and communication in perfect manner.
Management technique gives people cues and prompts to make the best decisions. People do not
always make the best decisions at work.
CONCLUSION
From the above report, it can be concluded that Tesco is the British multinational
Company more way the offering of the retailing, brick and mortar supermarkets, and a private-
label brand of products. Law of demand within operations of Tesco, Demand in retail sector
organizations like Tesco majorly refers to quantity of products and services that are required by
the buyers and quantity required is the amount that consumers are willing to purchase at a
defined price. Tesco to understand factors because of which change in demand curve occurs.
Mostly quantity demanded of a product change due to change in price and other factors such as
income, trends and taste, expectations (Scott, Lundgren and Thompson, 2018 ). Hence, the
7

supply is never constant over the respective time, it has been observed with continues increase
and decrease along with it rightward and leftward shift. This have the theory of firm which have
the consisting number of economies theories by explaining the predict nature of firm. This is
helpful in different way of influencing their behaviour of section making of different groups and
individuals in order to have the achievement of compliance in term of education, legislation and
enforcement.
8

REREFENCES
Babić, V. ed., 2018. Contemporary Issues in Economics, Business and Management. Faculty of
Economics.
Hosoe, M and et.al., 2019. Contemporary Issues in Applied Economics. Springer Singapore.
Hosoe, M., and et.al., 2019. Correction to: Contemporary Issues in Applied Economics. In
Contemporary Issues in Applied Economics (pp. C1-C1). Springer, Singapore.
McConnell, C., Brue, S. and Macpherson, D., 2016. Contemporary labor economics. McGraw-
Hill Education.
Marwala, T. and Hurwitz, E., 2017. Supply and Demand. In Artificial Intelligence and Economic
Theory: Skynet in the Market (pp. 15-25). Springer, Cham.
Dhingra, I.C., 2020. Unit-2 Demand and supply analysis. Indira Gandhi National Open
University, New Delhi.
Greenlaw, S.A. and Shapiro, D., 2017. 4.1 Demand and Supply at Work in Labor Markets.
Principles of Econ 2e.
Guan, D.X., 2017. Transaction Cost and the Law of Demand.
Heller, F., 2017. Technological innovation applied to walmart and tesco’s supply chain (Doctoral
dissertation).
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Scott, C., Lundgren, H. and Thompson, P., 2018. Guide to Plan in Supply Chain Management. In
Guide to Supply Chain Management (pp. 9-41). Springer, Cham.
9