Contemporary Business Economics: Laws of Demand and Supply Analysis

This report examines contemporary business economics, focusing on the laws of demand and supply, and their applications within a business context using Tesco as a case study. It explains the law of demand, emphasizing the inverse relationship between price and quantity demanded, and discusses factors influencing demand curve shifts, such as income, trends, and expectations. The report also covers the law of supply, highlighting the positive relationship between price and quantity supplied, and analyzes factors affecting supply curve shifts like input costs, technology, and expectations. Furthermore, it explores emerging economic theories and models of the 21st century, contrasting them with 20th-century models, particularly classical and Keynesian economics, and relates these to business practices. The analysis provides a comprehensive understanding of economic principles and their relevance in the modern business environment.

BM533 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 wrestle
to varying degrees with climate change, political scenarios, technology and even the
human element behind both labour 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 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 Laws of demand and supply, movement
along the 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. It can also be said that
higher the price of product, lower is the quantity demanded. This mainly occurs because
of diminishing marginal utility. This refers to when the consumers uses the first unit of
an economic good they purchase to fulfil their needs and uses each of the additional
goods they purchased to serve successfully lower value. 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 market operations and it helps in governing
their economies. Within operations of Tesco, demand in retail sector organizations like
Tesco 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 et. al., 2019). Tesco sets 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. The graph below clearly explains that
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price and quantity are inversely proportional 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 such as Tesco face a specific 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 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
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There are various kinds of factors that can cause change within the demand curve. It is
important for retail sector organizations such as Tesco to understand factors because of
which change in demand curve occurs. Mostly, quantity demanded of a product,
changes 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 high salary people can
afford to pay more for a product 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 needs to continuously analyse and update their products and
services and per the changing trend and taste of the customers 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. This shift in direction of the curve can be brought in both the
directions as per the expectations.
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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 economics. Law of Supply states
that there is a positive relationship between quantity that suppliers are willing to sell and
the price level of the 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 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.
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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 contradiction is the leftward movement of supply
curve tends to be brought up by their 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 take the shift in supply curve as the
factor have the conclusion of the factors which are such as
Interests ‘rate and wages-
Raw material prices- When the price of input good increase, the firm tends to have the
facing of high level of production cots which turn to supply reduction and less level of
profitability. The raw material of Tesco are such as raw beef, burger bread , groceries
and other items. 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. The change in technology can be
such as online sytm for ordering the item or digital payment. 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 leftward shift. Hence, factor which are determine their supply other than
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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.
Expectation of customer - 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.
As the customer want more organic foods as the company fail to provide according to
customer expectation.
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.
TASK 2
2.1 Emerging theories and models in contemporary economics of 21st century with
those of 20th century and relate both 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
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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
is their theory has been developed shortly after the birth western capitalism which are of
countries to have the highlighting o the prominent level of development in the classical
economic.
This theory has the associated with more level of lassies 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, the
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 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 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).
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 (Scott, C., Lundgren, H. and
Thompson, P., 2018).
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 industry diffusion of respective knowledge. In addition to that is the
increasing level of efficiency in the terms of telecommunication along with
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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 more level of variability which indicates that is 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 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,
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Lundgren, and Thompson, 2018). 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. 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 to have the achievement of compliance in term of education, legislation, and
enforcement.
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REREFENCES
Babić, V. ed., 2018. Contemporary Issues in Economics, Business and Management.
Faculty of Economics.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dhingra, I.C., 2020. Unit-2 Demand and supply analysis. Indira Gandhi National Open
University, New Delhi.
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at
Tesco.
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).
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.
Marwala, T. and Hurwitz, E., 2017. Supply and Demand. In Artificial Intelligence and
Economic Theory: Skynet in the Market (pp. 15-25). Springer, Cham.
McConnell, C., Brue, S. and Macpherson, D., 2016. Contemporary labour economics.
McGraw-Hill Education.
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.
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