Contemporary Economic Analysis of Demand & Supply - FamilyMart

This report provides a contemporary economic analysis of demand and supply, focusing on FamilyMart Groceries. It examines the law of demand and supply, detailing factors influencing shifts in demand and supply curves such as customer preferences, income, price fluctuations, and raw material costs. The report also discusses traditional economic theories like Adam Smith's laissez-faire approach and Keynesian economics, alongside modern theories like nudge theory, and their application to FamilyMart's business strategies. The analysis aims to provide insights for improving sales and profitability by understanding microeconomic principles and market dynamics, with the goal of enhancing decision-making processes for the sales manager.

Contemporary
Economic Analysis

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Task 1...............................................................................................................................................3
1. Determination of Law of demand movement and changes in demand curve with influencing
factors..........................................................................................................................................3
2 Determination of Law of supply movement and changes in supply curve with influencing
factors..........................................................................................................................................6
TASK 2..........................................................................................................................................10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Economics is a matter of subject that is related to the production, distribution and
utilization of essential products. It is related to description of how the organisations, government
and other businesses formulate important policies while allocating the resources. It mainly pays
attention on the assumption that all the customers in the market acts very rationally which means
they compare the value they are receiving against the price paid for the product(Bhattarai and
Conway, 2021). The report will address the two essential concepts of the economics i.e. Demand
and Supply in context of FamilyMart. It is second largest store chain in Japan. The changes
which the business face due to the fluctuations in the market. The company has appointed a new
sales manager for improving the sales of the organisation. The traditional and modern theories
will be discussed in the report in context of FamilyMart.
MAIN BODY
Task 1
1. Determination of Law of demand movement and changes in demand curve with influencing
factors.
The determination of the behaviour of the customers in buying a particular product is studied in
this concept of demand.
Law of demand: It can be defined as a concept which states that the demand and price of
the goods or services are inversely related to each other. When the price of the products increase,
then the demand of the goods or services decreases in the market. Similarly when the price of the
products decreases, the demand of the goods or services increases by the customers. Changes in
the demand curve is also an essential factor which influences the increase and decrease in the
demand due to the change in the prices. FamilyMart Groceries is analysing the reason for its
fluctuations in the sales which are directly impacting the profits of the company. The sales
manager of the organisation lacks proper knowledge of the micro-economics which are causing
the change in the demand curve(Callais and Young, 2021).

Influencing factor which effect the change in demand curve are as follows:
 Needs and preference of the customer: It is considered an essential factor which
influences the demand of the products in the market. It involves the needs and
preferences of the customers with the change in time period. When FamilyMart sells its
products which are unique and very demanding by the customers, then the position of the
demand curve is changed to higher place in the curve.
 People earnings: The income of the consumers is also a very significant factor in
changing the demand of the goods or services in the market. The reason behind this is the
mentality of the customers. When the income of the customers increases, then they buy
more products from the market. Similarly if the earning is decreased, then the demand of
the products in the market also reduces. In context to the FamilyMart Groceries, the
demand curve will move in upward direction when the income of the customers get
increased.
 Fluctuation in related product price: This factor is related to movement in the demand
curve due to the increase or decrease in the price of the substitute products. The business
of FamilyMart is also getting affected by these fluctuations in price of the substitute
products(Das, 2020).
 Other expenditure: This factor also needs to be considered for the change in demand of
goods or services in the market. All the organisation's do their promotions and
advertisements in order to enhance their sales and the profits margins. It involves

branding of their products in newspaper, radio, television and on social media platforms.
This helps FamilyMart in increasing their customer base and improve the image of the
brand. All these other expenditures are also responsible for the change in the demand of
the product in the market.
 Price of the goods: It is the most essential factor for the change in demand of products.
Every customer wants a low price of goods or services along with the best quality. It has
been seen that the consumer's attract to those shops which offer discounts on their
products. FamilyMart should also need to do something in order to reduce the price of the
products.
Diagram of shifts in the demand Curve
The demand curve shifts with the change in demand due to the factors which make an
influence. These factors are needs and preferences of the customers, earning of the people, price
of substitute products and price of the product. It can be better understood as movement in the
demand curve due to the factors other than the price of the product. It is called as a shift in the
demand curve. The movement can be in both upward and downward direction in accordance
with the positive or negative change in demand of goods or services. When the quantity of the
commodity increases, then the demand curve will shift to the right side and similarly when the
quantity of the product decreases, then the demand curve will shift in left direction.(DiMaggio,
2019).

2 Determination of Law of supply movement and changes in supply curve with influencing
factors.
The quantity and services of product provided at a fixed appropriate price or for a
particular time period by the manufacturer refers as supply and through this type of supply chain
helps the company to maximize the profit.
LAW OF SUPPLY : The basic law is when the supply of the product increases or takes
boost in their supply then automatically the price of the product raises this is called the law of
macroeconomics. The price of the product totally depends on the supply of that particular
product which helps the producer to keep a balance between sale and supply of the product and
make more profit out of it. When the demand of the product increases then supply have to be
increased respectively , by applying this method familymart groceries analysed the decision
making about selling the product in a way that it creates more profit for the company and it is
vital to gain the prespective of the having more profit and revenue in the business(Lawson,
Murphy and Powell, 2020).

Changes in supply curve with influencing factors are as follows:
Change in the goods price : Numbers of supply and the price of the product is totally
related with each other which helps to understand the profit of the company and to get the
knowledge about the commodity supply and price because the higher the commodity price would
be , the higher the profit will be possible for the company which will enable them to sale more
product. Familymart must look forward to raise the production volume by which it can sale more
than before(Liao, Xu and Herrera, 2020).
Price of other Product: Family mart groceries needs to aim at the prices of other
product which would help the company to have more profits and raise the business. The
company should not focus on only one product as they should have more than 2 products as it
removes the barrier of dependency on one product which paralyses the company to ear the profit
from only one product. By increasing the commodity price the company can make more profits.
Prices of raw material:
The profit of the company depends also on it's raw materials as by raising the price of the raw
materials company can make more stake and make more profits and it totally defines the the
effect of the product in the market and the profit of the company. Family mart suffers the same
factors for its production and company focuses to sell less product(Vail, 2020)(Venäläinen,
2018) .
Innovation and Technology:
The company needs to be more productive in terms of technology by making their products
available and easily accessible in the market. Family mart should focus on these terms as these
factors boost the profit of the company because along side the technology innovation is also a
vital part for making the profit for the company as company tries new innovative ideas for the
convenience of the consumers it raises the profit of the company.

Government Programme:
The supply and quality of the product depends on the policies of the government which is
looking after after market activity. The taxes helps increasing the price of the product and if the
tax goes higher the it can make the company to supply less then before for the profit margin and
on the other side it could be helpful as well in term of concession and subsides by raising the
quantity of the supply which helps the company to gain more profit and invest more for the
quality and quantity.
Target of the company:
The price of the product generally raises at the higher supply of the product and these target
helps the company to have the profit and focus on expanding the company on a higher level than
it was before. The company which sells their product on a lower price never increase the profit
on a good level. So company should follow the economic of the market for targeting the
maximum gain to earn profits.

Change in Supply Curve:
Change in supply takes place only when company has a change in their product price ,
technology , price of raw material , changes in a government policies etc. This makes the
company to go in a different direction to have ideas that could make profit for their company.

TASK 2
Conventional Theories of Economics
Economic Theory of Adam Smith- This theory is developed by Adam Smith under
notion that markets works better when the government doesn't intervene in the activities. He
mentioned in the theory about the countries resources can be naturally used by sensible
individual and intervention of government destructs the growth of the economy.
After the governments discouraged the global trade, approach of Smith's laissez-faire in
economic policy came in existence. The power of monopoly of the group and policies related to
commerce directly intervened by the government were criticised by Adam Smith. In the theory
he mentioned that generation of benefits for country is allowing the persons for deciding in using
their money, land, labour and machineries for the suitable process. The theory suggests that for
getting result in the system of self organisation, it is best to allow the individuals for pursuing the
self interest.
Economic Theory of Keynesian- Its a macroeconomic theory which discusses about
the total expenditure in economy and its impact on the output ,employment and inflation. The
theory came into existence in the 1930s by the British economist John Maynard Keynes for
understanding the Great Depression. Theory of Keynesian is observed as the demand which
focuses on the changes in economy in a short period of time. It states that if the total demand in
economy fells, it results in loss of jobs and manufacturing will be declined in cost and wages.
Application of the theory in the organization Family mart Groceries is applied when government
of the country increase supply of funds which will result in the goods demand increase and
services. The Keynesian theory may be taken in account by the Family mart Groceries as the
exception to law of demand which tells that if prices of products and services rise then the
demand will decrease or vice versa. In relation to the business enterprise Family mart Groceries,
the theory is helpful in enhancing the opportunities for jobs, inflation rate decrease leading to
cost reduction,decrease in rate of interest.

Modern Theories
Nudge theory- This theory states that influence of small ideas and positive statements
on the behaviour of consumers. The supporters of this theory argue about the placing of nudges
which is very crucial for the firm as if they are placed well then it will decrease the failure of
market , save money of government and aid in enhancing the efficiency of use of resources.
Application of this theory in the Family mart Groceries, the enterprise encourages the actions
and changes in efficiency for using resources.
Behavioural theory – It is the theory introduced by Richard Thaler who had as good
composition of economical and psychology environment. In the business organisation Family
mart Groceries the application of this theory in practices of businesses includes the use of
shortcuts and thumb rule for taking quick decisions. In contemporary world, the firms initiate
for the knowing the customer are irrational and embed theory in decision taking for making
policies of the enterprise which makes the shareholders worth when done efficiently and
efficiently(Aulenbacher, Décieux and Riegraf, 2018).
.
Comparison and contrast -
In Family mart Groceries business organisation application of the conventional theories
are done with the aid of assumption that sensible individuals take the rational decision with the
motive of increasing the economical welfare. Meanwhile the contemporary theories of
economics are applied when taking consideration the components like expenditure,tax policy
and currency borrowings which are in control and not operating by the central government. In
Keynesian theory the government of any country increase supply of money which results in
demand increase of goods and services demand. However Adam Smith theory applied on
Family mart groceries for getting results in the system of self organisation it is better to allow
individuals to continue the self interest
By the application the conventional and contemporary theory in Family mart Groceries, it
has been found that one thing is common in all theories that they aid in various terms in
accordance for the status and circumstances of the business enterprise and enable the executives
and analysts in understanding the macroeconomic issues in economy(Anderson, 2020).

CONCLUSION
The above project concludes that demand and supply have inverse relationship in
economics. By the helps of law of demand and supply it is simple in understanding the offerings
flows in market. There are various factors which impacts the demand of products and services in
markets and cost of goods, income of consumers, tastes and preferences of customers in
response to changing environment. There is opposite relation among the demand and cost of
commodities. The project the discussion on various theories have been done in context of 20 and
21st century like Behavioural theory, Behavioural theory, Adam Smith Economic theory and
Keynesian theory and also application on the business firm Family mart Groceries for how they
can effectively use the theories and implications explained.

REFERENCES
Books and Journals
Anderson, W., 2020. A cultural-economic examination of public relations measurement in the
1920s and its implications for contemporary practice. Corporate Communications: An
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contested terrain in contemporary capitalism. Current Sociology, 66(4), pp.517-530.
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freedom?. Contemporary Economic Policy, 39(4), pp.808-830.
Das, G.G., 2020. Trade, Environment and Adjustments: Contemporary Themes. Foreign Trade
Review, 55(3), pp.271-276.
DiMaggio, P., 2019. Cultural aspects of economic action and organization. In Beyond the
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Liao, H., Xu, Z. and Herrera, F., 2020. Applications of contemporary decision-making methods
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Vail, M.I., 2020. National liberalisms in a neoliberal age: ideas and economic adjustment in
contemporary France and Germany. Comparative European Politics, 18(2), pp.109-127.
Venäläinen, J., 2018. Culturalization of the economy and the artistic qualities of contemporary
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