Economics for Business: Demand, Supply, and UK Policies Report

This report provides an executive summary of business economics, emphasizing the importance of understanding demand and supply dynamics in a changing environment. It analyzes how economic factors impact business performance and consumer behavior. Task 1 uses supply and demand analysis to identify factors influencing consumer demand for retail goods and services, including UK regional factors, population demographics, income effects, and the impact of substitute goods. Task 2 examines UK governmental and economic policies that influence consumer retail spending, such as poverty programs, government transfers, retail subsidies, and stimulus packages. The report highlights the importance of these policies in maintaining economic stability and influencing consumer behavior. The report explores the impact of the COVID-19 pandemic on the retail sector and the importance of adapting to changing consumer needs and governmental regulations.

Economics for
business

EXECUTIVE SUMMARY
This report it is summarized that economics is defined as study of economy which is
pertaining in the country and make the decision accordingly. The environment is changing
continuously where it is important to analyse demand and supply so that all activities can be
perform effectively. For any business economic is important as it helps to analyse the business
situation and make efforts to supply the products for the purpose of maintaining a balance
between demand and supply. This report helps to understand that how economics can be helpful
to developing a business and maintaining higher performance.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
Using supply and demand analysis, identify the main factors in determining the positive and
negative .......................................................................................................................................1
Task 2...............................................................................................................................................8
Identify and explain the main UK governmental and economic policies that could be used to
influence consumer retail spending in the United Kingdom.......................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business economics is defined as applied economics that studied about financial,
organizational, environmental, market related issues which are facing by company. Business
economics assess certain factors that is impacting on corporation such as organization,
expansion, management, and strategy which are important to consider while running a business
(Modern theory, 2020). This can help to develop the activities and performance if all
economical factors are properly managed that can help to operate a business and increase the
performance. It has been seen that needs and wants of customers is changing day by day as
environment is changing where it is important to analyse the demand and supply the products
and services accordingly. The top management of organisation are responsible for identifying
how prices of products affected the retail economy. This report covers identification of factors
that affected the consumer demand, how UK and governmental policies influences consumer
retail spending.
Task 1
Using supply and demand analysis, identify the main factors in determining the positive and
negative
In business environment, needs and wants of people are changing day by day where it is
important for organisation to understand what is going on trend and how this can be influenced
the economy. The supply and demand is an analysis that uses to analyse the relationship between
quantity of a commodity that manufactures wish to sale their products at various prices. This is
important for organization to understand what customers wants and how they will be satisfied by
offering the variety of products and services. Economics is the application of different theories
and practices which uses by companies at the time of formulating marketing strategies and
increasing the performance so that all activities and functions can be run effectively. In relation
to business economics, two traditional economic theories are uses as normative and positive.
In economic demand and supply of products are two important element that mainly
affects any businesses and profitability of organization. This is important for businesses to
focuses on pricing factors and make effective business decision in changing environment
(Demand and supply analysis, 2018).
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Illustration 1: Demand and Supply curve, 2013
Source: Demand and Supply curve, 2013
As whole the world is facing from Pandemic (Covid-19) that is a serious diseases in
whole country which highly affected the demand and supply in relation to retail good and
services that have significantly positive and negative impacts on economy. The corona virus has
impacted on consumer retailing spending that has reduced the organizational sales and
profitability.
Law of Demand: This law is related to prices of products and services that might be
affect the quantity of products. The prices and quantity have negative relation that might be
affected the productivity of a business (Law of Demand, 2019). As Pandemic is facing by whole
country, affected the retail sector. In this, people become so much health consciousness so they
demand of healthy products have been increased and other products has reduced.
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Illustration 2: Demand Curve, 2019.
Law of Supply: This is an economic theory that mainly uses to maintain relationship
between price and quantity that produce by organisation according to demand of commodity.
This shows positive relation between price and quantity. For instance, price of retailing products
increases then supply of goods also increases due to high demand (Law of Supply, 2019).
The law of supply is considered as microeconomic law that states that price is important
factor for any organisation. As if prices of goods and services increases, the quantity of goods
that offers by suppliers also increases. Supply in market can be understand as an upward
slopping curve which shows how quantity supplied and will respond to various prices over a
time period (Law of Supply, 2019).
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Illustration 3: Supply Curve, 2019.
(Source: Supply Curve, 2019)
Factors in determining the positive and negative shifts linked to changes in consumer demand for
retail goods and services
UK regional or local demand factors: This is main factor that needs to consider while
running a business. In UK, many retail organization are available that are selling the variety of
products at retail prices that helps to attracts number of customers. In UK, organisation are
providing products and services at different prices which affected the organizational
performance. Such as if prices of products in regional and local area is lower then demand curve
will be shift toward uplift that means demand of products will also increase. Oppositely, if prices
of products increased then it will be affect on demand negatively as low in demand of products.
Due to Pandemic demand of retailing products has been reduced as customer become more
health consciousness who are demanding safety and healthy items that affected business
negatively (Movement along demand curve, 2020).
UK population and demographics : A positive shift in UK population and
demographics change the consumer demand for its retailing products and services. This impacted
positively on demand and supply positively as due to increasing population, demand of retailing
products is continuously increasing which helps to develop a business effectively. If needs of
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customers are changing day by day then it will be affect the retailing business negatively as it
reduced the demand.
The income effect and shifts in employment: For making a strong economy and
increasing organizational performance it is important to analyse the income effective and
employment rate that might be affect the business positively and negatively. The recently
appeared Pandemic have impacted on demand and supply of retailing products negatively
because many people become unemployed and many have reduced the income group that
reduced the demand and supply of products.
Complementary or substitute goods: The another factor which impacts on consumer
demand for retail products and services in case of shifting. If substitution of retailing products
and services are available then it will affect the retailing business negatively as demand of such
products and supply will be reduced (Retaining business affected due to Pandemic, 2020).
Shift in Demand Curve:
The demand curve digram states that quantity of any commodity depends on prices of
commodity. This covers some factors such as prices of products, income and preference of
customers that affected the demand of any products. If there is small shift in prices then it will
direct impacts on demand and buying power of customers. For example, prices of retailing
products have been increases then demand will also be change. There, it has defined that price of
any products matters a lot that needs to consider in running the business (Shift in demand,
2013).
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Illustration 4: Shift in demand. 2013
Source: Shift in demand. 2013
Shift in Supply Curve
The quantity of a commodity which is supplied in market depends not only the price
obtainable but also consider many potential factors like as substitute products, technology and
availability of cost and labour that affected the business. This is a graphical representation where
supply curve move to left or right side due to changing in demographics.
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Illustration 5: Shift in supply, 2013
Source: Shift in supply, 2013
This diagram shows that if the price of products are relevant the quantity and supply will
be effective as number of customers have influenced. On the other side, a small shift in prices as
shown increases in prices of products will decrease the quantity and supply. In context to relating
good, if prices of products have been increased then sales and supply will be reduced which
negative affected the business.
Factors which affects supply due to change in prices
Cost of production: This factors states that is cost of production have increase or shifts
positively then supply of products will atomically change. As it increases the cost of organisation
which reduced the production level as well as supply (Factors which influences supply, 2019).
New technology: This is another factor can affects the supply of retaining products and
services effectively. For instance by using new technology and innovation distributing the
products can impacts on organizational performance positively and develop the business
effectiveness in changing environment.
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Task 2
Identify and explain the main UK governmental and economic policies that could be used to
influence consumer retail spending in the United Kingdom
In retailing sector, governmental activities have important impacts as it affected the
business in case of favour and vice versa. Government is playing important role as it formulate
different policies and regulation for the purpose of running business and maintaining the
economic flow in business environment. Whenever a business is going to be establish then there
is requirement of following different regulations strictly that might be affected their business and
performance negatively. In UK, management of any organization should be analyse the all
governmental policies which are developed to run a business and maintaining higher
performance (Adedoyin and Zakari, 2020). Before establishing any business there is needs to
analyse the market and regulation which can help to manage the activities and performance in
changing environment. In UK, there are many governmental and economic policies that can
influence consumer spending in retailing that are as explained:
Poverty programmes – This is the conditions which is facing by different countries in
their economy as people are below poverty line who are not completing even their basic needs.
So government of country is responsible for developing the economy by reducing the poverty. In
UK, poverty rates are increasing so government has formulate many regulations and run many
programmes for the benefits of poor people. As it arrange the education programme,
employment opportunity, free meal and living facility that supports to make strong economy and
also influences the consumer spending positively. By running poverty programmes, rate of
employment increases which supports to increase the productivity in retailing sector.
Government transfers – This means redistribution of income and wealth by means the
government make a payment, without goods and services being received in return. In there is
changes in government transfers such as change in tax rates, income tax, wealth tax and fiscal
policies which are formulated by governmental authorities for the purpose of making a good
economy. In UK, if government has reduces the income tax rate, fiscal policies, and wealth tax
then retaining products will be affected directly as it increases consumer spending in buying the
particular products and services. This also affects the organizational performance and
economical condition of country.
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Retail subsidies - The government of UK is efforts to deal with Pandemic as it
formulated new regulations for retailing subsidies which became beneficial for organization as
well as customers as demand of products and sales can be increases. This regulation also saved
the millions of jobs in retail and other sector which have increased the spending power of
customers and developing the business continuously. Therefore, it is important for government to
analyse the situation of their country and formulate the different regulations which can help to
increase the spending capacity and living standard of people. By getting the retailing subsidies,
sellers get opportunity to buy products from their suppliers at lower price which can help to
provide the products and services effectively.
Stimulus packages – This means a packages of tax rebates and incentives which uses by
government of various countries for the purpose of stimulating economy and save the country
from financial crisis. For making the strong economy and developing the business government is
developing this regulation which can help to increase the spending and attaining the higher
earnings. As whole world is facing the Pandemic where customers become more conscious to
buy the products which has reduced the spending power of their customers and affected the
economy negatively. The government of UK develop the stimulus package in which it provides
tax rebates to customers which impacts consumer spending positively as it increases demand of
retailing products and services effectively. The main reason behind this to bring the
improvements in UK country by reducing financial crisis, increasing demand of products or
consumer spending which leads to incremental in employment rates. This cycle will be continue
until the economy would recover from collapse (Stimulus Package, 2020) .
Industry-specific measures – This is very needed policies and governmental regulations
which are formulated by government for the purpose of taking safety measures and developing
the economy continuously. As Pandemic occurred in whole country where it is required to
formulate specific regulations that can assures customers to buy the products and services in
changing market and affect the business positively. In UK, government has formulated some
specific guidelines for retail sector and others which needs to be follow for the purpose of
running a business smoothly and providing the healthy life to customers. The government states
the retailing company can offer its products by maintaining social distance, proper sanitized store
and distribution centre, better quality of products, following all trade rules, managing task and
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