Economics for Business: Analysis of Supply, Demand, and Policies

This report, focusing on economics for business, delves into the dynamics of supply and demand analysis within the retail sector. It examines factors causing shifts in both demand and supply curves, providing insights into how changes in price, consumer income, advertising, and government regulations influence consumer behavior. The report then evaluates specific economic policies employed in the UK to impact consumer retail spending, including poverty programs, government transfers, and retail subsidies. It explores how these policies aim to influence consumer spending and support the retail sector. The report concludes by summarizing the key findings and their implications for businesses operating in the UK retail market.

ECONOMICS FOR
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Supply and demand analysis and factors affecting them ..........................................................1
TASK 2 ...........................................................................................................................................6
Evaluate economic policies that used to influence consumer retail spending in UK.................6
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business economics mean applied economics that study the financial, environmental and
market related issue faced by entity. It is he study of functions of a economy such as supply and
demand. It include all the factors in which entity operate, it focus on factor of external economic.
And also influence by change in rules and regulation of industry norms. Managerial economics
is the type of this which means decision making done within the company. It is apply to non-
profit organization also which mean they have to use capital to remain constant within the
economy. This report is based on retail sector which show the impact of economic factor on the
retail organization. It also covers supply and demand analysis and provide the factor in
determining positive and negative shifts related to consumer demand for retail goods and
services. In UK, economic policies used to influence consumer retail spending.
TASK 1
Supply and demand analysis and factors affecting them
Demand analysis- In this first understand that demand is an process refer to customer
desire to purchase goods and services and willingness to pay the price for given goods and
services. In this analysis there is both positive and negative shift in demand curve is happen by
the increase in price or decrease in price which result in decrease and increase the quantity
demanded. In this market demand is also used which mean total quantity demanded across
customer for a given good. And aggregate demand means total demand off all goods in the
economy. It is an technique to know that business is successfully enter into market at right time
or not to expand their operation. It is closely related to supply curve but both are opposite to each
other (Supply and demand, 2018).
Supply analysis- It is an economic concept that describe the total amount of goods and
services which is available to consumer by the producer to sell at various prices. It refers to the
specific price available across a range of product. In this analysis if people demanded a product
and willing to pay for it. In supply when price of product increase producer are willing to
manufacture more product to realize more profit. If there is when price of product decrease
producers are not able to cover the cost of final goods (Supply and demand analysis, 2016).
Each product and service have their own demand supply pattern which is based on the price and
quantity. In the situation if the person is ready to pay more than the demand of the product is also
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increase. As the supply increase the price of product fall down. Through this marketer reach at
the equilibrium in which supply equals to demand for a specific product at a given price at a
given point.
Positive shift in demand curve
In this diagram, there is an increase in the demand curve which result in positive change in the
consumer retail spending. In this Do is increase to D1 due to many reason which result in
increase in price and increase in quantity,and supply remain constant.
Positive shift in supply curve
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In this digram, there is increase in the supply curve which mean positive change in the retail
supply in the market, there is increase in the curve from S0 to S1 which result in price is decrease
and quantity is increase.
Negative shift in demand curve
In the diagram, there is decrease in the demand which result in negative decline in the consumer
demand of retail goods. It occur due to decrease in price and and decrease in quantity demanded.
There is decrease in demand curve from D to D1 due to many factor.
Negative shift in supply curve
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In this diagram, there is decrease in supply curve which result in decrease in quantity and
increase in the price so their retail supply of goods is decreasing and shift from S to S1. This is
the result change in many factor.
Factors are responsible for increase and decrease of demand-
 changing price of substitute goods- It is the main factor responsible for change in
demand because substitute goods act as replacement for another product which help the
retail shops in competitive demand. Foe example- by rise in the price of iPhone will
impact rise for Redmi phone. Higher electricity price encourage alternative source of
energy which is solar energy ( Factors for change in demand, 2019).
 Change price of a complement- It means increase in one product of compliment goods
result in fall in demand of one product. And if there is fall in price of compliment goods
of product y result is increase in demand for good y. for example- if there is reduction in
price of the iPhone this can lead to rise in the demand of iPhone and if there is increase in
the price of Samsung this lead to decrease in the demand of their compliment product.
 Change in the income of consumer- It means generally all the customer buy normal
goods. If the income goes up audience purchasing power for the goods and services also
increase which result in positive shift in demand curve. When income fall there is
decrease in demand which is in the case of inferior goods. In the discretionary income
means disposable income less essential payment like electricity and gas. By increase in
interest rate result in reducing demand.
 Effect of advertising and marketing- It means heavily spend on advertising and
marketing by the organization help them to bring changes in consumer taste and fashion
which is the impact of change in demand.
 Interest rate and demand – It means many consumers buy goods on credit or they buy
by borrowing money from others which result in increase in the rate of interest. Therefore
if the bank decide to change the interest rate then the demand of goods and services also
change. For example- household products such as refrigerator, furniture and vehicles
their demand is affected by change in mortgage rates.
 Rise in the unemployment level – It means there is increase in the unemployment for
the workers which result in decrease in demand because there are lot of worker are
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unemployed and they don,t have any work to do which result in increase in
unemployment. Change in customer preferences- It means by change in consumer taste there is no
demand of the existing product which result in shift of demand curve to the left.
Factors are responsible for increase and decrease in supply curve-
 Changes in the cost of production- It means lower cost of production means that
supplier supply more goods at each price. For example in the book publisher see a
decrease in their imported book their saving is passed to retailer and wholesaler in the
supply chain which result in lower price for consumer. If the production cost is increase
in the organization they have to pay high wages to the employee and they cannot supply
as much at the constant price which result in inward shift of supply curve. If there is
increase in the price of imported goods result in decrease in supply. Because of decrease
in exchange rates (Factors for change in Supply, 2017.)
 Change in technology- It means technology are changing quickly which result in
increase in supply and lower price for customer. By adoption of technology there is
expansion in their curve towards right and result in innovative product supply by
supplier.
 Government tax and subsidies and regulations-By indirect tax cause change in
production cost result in decrease in supply. Apart from these subsidies also bring fall in
supply costs which result in increase in supply curve. Changes in the norms and
regulation also increase the production costs which result in decrease of supply.
 Changes in climate in agriculture industries- By changes in the climate influence
market supply very greatly because commodities such as coffee, wheat and oranges effect
by climate. Unfavourable weather bring negative shift in supply curve because by the
effect of drought, and favourable weather result in increase the supply because it provide
good harvest. Some product used ingredients in the production of another product, by the
change in the supply of one effect the price of another. For example if the price of dry
fruits is rising then the cookies which is made of dry fruits there price is also rising.
 Change in the price of substitute in production- It means goods that could have
supplied using the same resources. For example if cotton price rise this cause farmers to
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invest their money in the cotton harvesting and help them to switch from one crop to
another.
 The number of producer in market and their objective- In this number of supplier
affect market supply, because when new business enter into market their price is cause
downward movement. And if owner think to move their existing business for increase
their profit also increase their market share and by all the result is there is outward shift
of supply curve. Entry of new producers into market- In the market if there is entry of new producer in
market they have to decrease their price for increase their sales which result is increase
in supply curve.
Example -
According to this example, the price of the product is 3 the quantity which is supplies is 1000.
when price rise to 9 it also increase to 3000 which result in increase in the supply .
Apart from these the price of the product is 3 the quantity demanded is 7000. when price rise to 9
the demanded quantity decrease to 3000 which is the opposite of quantity supplied.
TASK 2
Evaluate economic policies that used to influence consumer retail spending in UK
In the retail sector, there are some factors which are responsible to influence consumer
retail spending in the UK are-
 Poverty programmes- Poverty is stage which is come when person is not able to fulfil
there regular needs and requirement which is set by Department of health and human
services, it is a condition which lack financial resources and essentials for standard of
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living. Each country have its own measurement to determine the people living in poverty.
In the UK government make many poverty programme to save the people and meet their
regular needs which is clean water, healthy food, medical attention. They encourage
them to meet a certain income threshold (Poverty programme, 2020). There are some
traits of living in poverty are- absence of education.. Through this issues lead to increase
in crime rates also in the society.
 Government transfers- It means transfer of payment in exchange of goods and services,
It is a one way payment to organization. They transfer the payment through welfare,
student grant and social security. These transfer helps in redistribution of wealth through
various social programs. there are different types of transfer is there which is social
security payment which is for retirement (Government transfer, 2020). It also include
charity and donation by individual to organization which result in increasing the
consumer retail spending in UK. It also make economy encouraging by providing more
money into people hands.
 Retail subsidies- It is benefit provided by government to the individual and organization
or institution in the form of cash or as a tax reduction. This is used to remove the pressure
from the consumer hand and it is considered in the overall interest of all which result in
promote of economic policy. Apart from these by providing subsidies to retail sector they
can increase their sale and sale the product at low price. By this supply get increase and
demand of the product is increase. There are two types of subsidy is present first is direct
which involve actual payment toward individual. And second one is indirect which mean
buying of the product at below market price which result is saving (Retail subsidies,
2020).
 Stimulus package- It means economic measures used by government to stimulate the
economy. Their main aim is to increase the employment and spending. This result in
increasing the government spending and reduce private spending. It main objective is to
reduce the taxes and rates to remove the economy from recession. Government help the
organization by providing the worker. They help in providing monetary and fiscal policy
to the organization and individual. Their goal is to expand their demand through
employment and investment (Stimulus package, 2020).
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 Industry specific measures- It refers to the evaluation of financial and economic
condition of given sector. It used by the company to show their performance that they are
perform in the sector. They are employed by investors which all have different
specialization, this is mainly used by the external person to know the profitable
investment (Industry specific measure, 2020). Through this they improve their sector to
get investment from outsiders so they can expand their business and help them in earning
the profits. There are two approaches for this analysis first is top down in which they
focus on macroeconomics factor which give better impact on large population such as
unemployment rates. And second one is sector rotation approach means rotate the
investment in and out of different sector in economy of UK.
In the Corona Pandemic, income level of the person is decline which result in decrease in
purchasing power and they are not able to satisfy their needs and requirement. So government
develop many programmes to help them because it is a crisis for the global economy, it force
them to push into recession. In the market there are losses arise which result is increase in
unemployment and GDP growth also impact. Government help by providing monetary and fiscal
policy in UK. By increase in unemployment rate their GDP rate get decrease. In this Covid 19
government help organization in providing the transfer payment in exchange of goods to
organization as well as individual. They run many programmes many schemes to help the
audience from this Pandemic. Retail shops was provided free products and services to the person
of poverty.
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CONCLUSION
From this report it has been concluded that business economics mean technique used by
the organization address to economic principle, profit generate, management strategy and
production. There is a study of components of market which is demand and supply. Demand
mean consumer purchase the goods and services at a given price at a given period of time at a
particular place. And supply mean supplier sell the product at a given price at a particular time.
There is some factor is present which give impact on change in demand and supply which are –
tax rates, subsidiaries, change in technology and production cost. Monetary and fiscal policies
are main factor that influence the consumer spending on retail sector. There are some aspect also
for influencing the economic policy in the economy are poverty programme, government
transfer, stimulus package and retail subsidies.
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REFERENCES
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