Economics for Business: Analysis of Demand, Supply, and Policies
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This report, focusing on business economics, examines the dynamics of demand and supply within the retail sector, considering factors such as income levels, buying habits, substitute goods, and the impact of UK population demographics. It analyzes the factors influencing demand and supply curves, including price changes, government policies, and technological advancements. The report further investigates UK governmental and economic policies designed to stimulate economic recovery, particularly focusing on poverty programs, government transfers, and retail subsidies. The analysis highlights the relationship between these policies and consumer spending, emphasizing their role in supporting the retail sector and overall economic stability. The report concludes by discussing the implications of these economic factors and policies on business strategy and decision-making.
Economics for
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analysis of demand and supply and factor affecting them:........................................................1
TASK 2............................................................................................................................................6
UK governmental and economic policies to aid economic recovery from loss of consumer
retail spendings:...........................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analysis of demand and supply and factor affecting them:........................................................1
TASK 2............................................................................................................................................6
UK governmental and economic policies to aid economic recovery from loss of consumer
retail spendings:...........................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION
Business economics covers those problems that a managers of the firm faces. It gives
information about the elements that affects production capacity of an organisation. It Is a part of
economics that financial, organisational, market and environmental issues faced by firms. It is
about use of economics in the business in its planning, organising and decision-making. It serves
a bridge between economic theories and decision-making in reference to any firm. It is about
how business approach pricing strategy, evaluate market demand , market supply and factors that
influence a business. This report is based on retail sector in which economic factors affects the
retail goods or services. This report covers topic such as demand and supply analysis and
increase and decrease in demand and supply because of some factors. Apart from this it covers
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spendings (Change in demand curve, 2018).
TASK 1
Analysis of demand and supply and factor affecting them:
Demand analysis: Demand analysis refers to a process in which it helps firm to analyse
customers wants in order to buy goods and services. Through demand analysis, it helps
management team for decision making related to production, pricing strategy, advertising and
cost management. Demand refers to customers buying capacity for goods or services at a given
price in a given period. Analysis of demand in retail industry helps firm to analyse production
capacity and setting price for products or services. In retail sector demand of consumers depends
on various factors such as their buying habits, income level, preferences, complementary and
subsidiary goods etc. In context to United Kingdom demand also depends on UK population and
demographics. That factors affects demand curve by positive and negative that changes
consumers demand in retail goods or services (Change in supply curve, 2019).
Factors affecting demand of goods or services in retail sector:
UK regional and local demand factor: It depends on cultural demand of consumers, every
person belongs from different region.
UK population and Demographics: UK population has increase day by day that directly
affects demand of retail goods or services. Increase in population leads to positive shift in
demand curve. Demographics refers to age, gender, culture, preferences, culture etc.
1
Business economics covers those problems that a managers of the firm faces. It gives
information about the elements that affects production capacity of an organisation. It Is a part of
economics that financial, organisational, market and environmental issues faced by firms. It is
about use of economics in the business in its planning, organising and decision-making. It serves
a bridge between economic theories and decision-making in reference to any firm. It is about
how business approach pricing strategy, evaluate market demand , market supply and factors that
influence a business. This report is based on retail sector in which economic factors affects the
retail goods or services. This report covers topic such as demand and supply analysis and
increase and decrease in demand and supply because of some factors. Apart from this it covers
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spendings (Change in demand curve, 2018).
TASK 1
Analysis of demand and supply and factor affecting them:
Demand analysis: Demand analysis refers to a process in which it helps firm to analyse
customers wants in order to buy goods and services. Through demand analysis, it helps
management team for decision making related to production, pricing strategy, advertising and
cost management. Demand refers to customers buying capacity for goods or services at a given
price in a given period. Analysis of demand in retail industry helps firm to analyse production
capacity and setting price for products or services. In retail sector demand of consumers depends
on various factors such as their buying habits, income level, preferences, complementary and
subsidiary goods etc. In context to United Kingdom demand also depends on UK population and
demographics. That factors affects demand curve by positive and negative that changes
consumers demand in retail goods or services (Change in supply curve, 2019).
Factors affecting demand of goods or services in retail sector:
UK regional and local demand factor: It depends on cultural demand of consumers, every
person belongs from different region.
UK population and Demographics: UK population has increase day by day that directly
affects demand of retail goods or services. Increase in population leads to positive shift in
demand curve. Demographics refers to age, gender, culture, preferences, culture etc.
1
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Income level: consumers income is the one of the most affecting factor in changing of
demand. In retail sector, for buying goods or services totally depend on income level of
consumer. Everyone use different things according to their income level. If consumers
income increases it leads to increase in demand and in opposite if income decreases it
leads to decrease in demand.
Buying habits or purchasing limits: Buying habits are directly affects the demand of
goods or services because some persons buy things regular basis or some are buy only
occasional basis. Some consumers buying products in bulk or bundle of goods or services
(Supply and demand, 2020).
substitute goods and complementary goods: substitute goods refers to competitive things
or replacement option for another product. For example if price of tea increasing then
demand of coffee will increasing because of its lower price. Although tea and coffee are
subsidiaries to each other, customer can replace their goods demand easily in case of
these types of goods or services. Complementary goods are those goods or service that
are dependent on each other. For example pen and ink, if pen's demand increases it leads
to increase in demand of ink.
As per this diagram it shows when the price of goods or services increases demand of it
also increases that can be a reason of change in climate or new technology. According to this
when price was p demand of goods or services was d and after the change in price p1 it refers to
change in demand that is D1(Demand and supply analysis, 2017).
2
demand. In retail sector, for buying goods or services totally depend on income level of
consumer. Everyone use different things according to their income level. If consumers
income increases it leads to increase in demand and in opposite if income decreases it
leads to decrease in demand.
Buying habits or purchasing limits: Buying habits are directly affects the demand of
goods or services because some persons buy things regular basis or some are buy only
occasional basis. Some consumers buying products in bulk or bundle of goods or services
(Supply and demand, 2020).
substitute goods and complementary goods: substitute goods refers to competitive things
or replacement option for another product. For example if price of tea increasing then
demand of coffee will increasing because of its lower price. Although tea and coffee are
subsidiaries to each other, customer can replace their goods demand easily in case of
these types of goods or services. Complementary goods are those goods or service that
are dependent on each other. For example pen and ink, if pen's demand increases it leads
to increase in demand of ink.
As per this diagram it shows when the price of goods or services increases demand of it
also increases that can be a reason of change in climate or new technology. According to this
when price was p demand of goods or services was d and after the change in price p1 it refers to
change in demand that is D1(Demand and supply analysis, 2017).
2
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As per this diagram it shows decrease in demand by decrease in price. It can be possible
in the situation of decrease in income level. If persons income is decreases he or she spends low
in buying goods or services whether price of that decreases. In this diagram price p increase p1
and demand of retail goods or services increase D to D1.
The above data shows that negative relation between price and demand. When the price
of goods or services high that leads decrease in demand and when the price of goods or services
is low that leads to increase in demand. As per this data when price is 15 demand shows only 1
but when the price is 3 demand shows 7. that can be happened because of change in price of
subsidiary and complementary goods, income level and population of UK (Government transfer.
2020).
Supply analysis: Supply analysis helps an organisation to understand market supply
trends and recognition of supply chain. Supply refers to available goods or services for
customers at a given price in a given time. In retail industry, supply is totally depends on various
factors such as subsidiary goods or services price, raw material price, technology, cost of
3
in the situation of decrease in income level. If persons income is decreases he or she spends low
in buying goods or services whether price of that decreases. In this diagram price p increase p1
and demand of retail goods or services increase D to D1.
The above data shows that negative relation between price and demand. When the price
of goods or services high that leads decrease in demand and when the price of goods or services
is low that leads to increase in demand. As per this data when price is 15 demand shows only 1
but when the price is 3 demand shows 7. that can be happened because of change in price of
subsidiary and complementary goods, income level and population of UK (Government transfer.
2020).
Supply analysis: Supply analysis helps an organisation to understand market supply
trends and recognition of supply chain. Supply refers to available goods or services for
customers at a given price in a given time. In retail industry, supply is totally depends on various
factors such as subsidiary goods or services price, raw material price, technology, cost of
3
production, population paying capacity and their income level. Change in supply refers to
positive or negative shift in supply of retail goods or services. For example if price of x goods
are higher than price of Y, so it leads to increase in supply of y goods in case of subsidiaries
(Industry specific sector, 2020). This is the only one example but in real life there are many
factors that affects demand and supply.
Factors affecting supply of goods or services in retail sector:
Change in the cost of production: If production cost of goods or services increase than
suppliers will decrease the supply of that product because these product gives less profits
to them rather than other.
Change in tax policies of UK: Tax are the part of cost of goods or services, government
taxes and subsidiaries directly affects the supply in UK. Indirect tax cause an increase in
products cost that leads to negative effect on supply curve.
Change in technology: The quantity of production or supply directly affecting by changes
in technology, innovation and creativity. In retail industry technology plays crucial role,
technology can be affect supply of goods or services in negative or positive manner. If a
new product comes in market with new technology then it will replace the another
products supply because suppliers provides that product which will give them higher
profit.
Change in price of substitute goods or services: If tea cost are less than coffee than
supplier sell that product most because of higher profit that leads to increase in supply of
tea. In complementary goods if price of raw material will increase then it decrease the
overall products or services supply.
Number of suppliers in the market: The number of suppliers in the market will directly
affects the market supply because in this buyers have different options. Even when a new
goods comes into the market it leads to downward pressure on price.
Climate changes: Some things are depend upon the weather in retail goods or services
such as coffee, sugar etc. These things use as raw material that can affects the production
of products or supply of the goods or services in retail industry.
4
positive or negative shift in supply of retail goods or services. For example if price of x goods
are higher than price of Y, so it leads to increase in supply of y goods in case of subsidiaries
(Industry specific sector, 2020). This is the only one example but in real life there are many
factors that affects demand and supply.
Factors affecting supply of goods or services in retail sector:
Change in the cost of production: If production cost of goods or services increase than
suppliers will decrease the supply of that product because these product gives less profits
to them rather than other.
Change in tax policies of UK: Tax are the part of cost of goods or services, government
taxes and subsidiaries directly affects the supply in UK. Indirect tax cause an increase in
products cost that leads to negative effect on supply curve.
Change in technology: The quantity of production or supply directly affecting by changes
in technology, innovation and creativity. In retail industry technology plays crucial role,
technology can be affect supply of goods or services in negative or positive manner. If a
new product comes in market with new technology then it will replace the another
products supply because suppliers provides that product which will give them higher
profit.
Change in price of substitute goods or services: If tea cost are less than coffee than
supplier sell that product most because of higher profit that leads to increase in supply of
tea. In complementary goods if price of raw material will increase then it decrease the
overall products or services supply.
Number of suppliers in the market: The number of suppliers in the market will directly
affects the market supply because in this buyers have different options. Even when a new
goods comes into the market it leads to downward pressure on price.
Climate changes: Some things are depend upon the weather in retail goods or services
such as coffee, sugar etc. These things use as raw material that can affects the production
of products or supply of the goods or services in retail industry.
4
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As per the diagram it shows increase in supply as result of decrease in price that can be
influence by change in climate and technological changes in goods or services. In this supply
was s that increases by s1 because of decreasing in subsidiary goods prices or tax rates.
According to second diagram it shows fall in supply with the increase in price that can be
reason for change in subsidiary goods or change in complementary goods price. The supply was
s when the price was p and after the change in supply its shows supply increases by s1 at a price
of p1 (Stimulus package, 2019).
5
influence by change in climate and technological changes in goods or services. In this supply
was s that increases by s1 because of decreasing in subsidiary goods prices or tax rates.
According to second diagram it shows fall in supply with the increase in price that can be
reason for change in subsidiary goods or change in complementary goods price. The supply was
s when the price was p and after the change in supply its shows supply increases by s1 at a price
of p1 (Stimulus package, 2019).
5
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As per the above data it shows price and supply has positive relation. As when the price was 3 rs.
It shows supply as 1000 per month. After that when price was 15 that means supply of it 5000
that is because when the price of goods increases supply of goods also increases that gives higher
profits to suppliers in the retail industry.
TASK 2
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spendings:
Government and economic policies are the main factors that affects the customers
spendings but it has to be apply an organisation in a very specific manner that can help it to
grow and expand its business and in another manner it has the potential to damage the reputation
and profits of the firm. Government of UK provides various schemes to people so that they can
fulfill their needs also provides in retail sectors in order to make sure about generate
employment. There are various aspects that can affects consumers spendings that are poverty
programs, government transfers, retail subsidies, stimulus packages, and industry specified
measures (Poverty programme, 2020).
Poverty programmes: Poverty programmes can be categorized on the basis of rural and
urban are in the country. Most of the programs are created for rural areas because the
target of poverty is high in rural areas. These programs run by government in order to
fulfill consumers basic needs. That programs includes wage employment program, self
employment program, social security program , food security program and urban poverty
alleviation programmes that leads to decrease in poverty so that consumers can spend
into the retail goods or services easily. In coronavirus situation, there are various people
6
It shows supply as 1000 per month. After that when price was 15 that means supply of it 5000
that is because when the price of goods increases supply of goods also increases that gives higher
profits to suppliers in the retail industry.
TASK 2
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spendings:
Government and economic policies are the main factors that affects the customers
spendings but it has to be apply an organisation in a very specific manner that can help it to
grow and expand its business and in another manner it has the potential to damage the reputation
and profits of the firm. Government of UK provides various schemes to people so that they can
fulfill their needs also provides in retail sectors in order to make sure about generate
employment. There are various aspects that can affects consumers spendings that are poverty
programs, government transfers, retail subsidies, stimulus packages, and industry specified
measures (Poverty programme, 2020).
Poverty programmes: Poverty programmes can be categorized on the basis of rural and
urban are in the country. Most of the programs are created for rural areas because the
target of poverty is high in rural areas. These programs run by government in order to
fulfill consumers basic needs. That programs includes wage employment program, self
employment program, social security program , food security program and urban poverty
alleviation programmes that leads to decrease in poverty so that consumers can spend
into the retail goods or services easily. In coronavirus situation, there are various people
6
those lost their jobs and faces crisis to fulfill their basic needs. In this situation
government provides various programs and sources to those people who are belongs from
poverty line. Government provides some programs in order to reduce poverty and bridge
the gap between poor and rich. Poverty stricken society or a nation doe not possess basic
necessities of living like proper housing facilities, safe and drinkable water, nutritious
food and medical aid in case of illness.
Government transfers: Government transfers related to paying by government to public
in order to meet their daily needs. Transfer payments usually refers to payments that are
made to consumers by government through various social schemes. In coronavirus
situation, government provides various schemes to consumers through direct payments or
employment wages that helps them to fulfill their basic needs. The government of UK
uses this in that manner so that it can increased profits and growth for the nation.
government transfers the wealth of the country in a proportionate manner so that
difference between the poor and rich can be reduced. These transfers can be given to
firms those are suffering from difficulties. This bridges the gap between government and
public income and spending that helps economy to rise up. These all things affects the
purchasing power of an individual and benefits to whole economy because spendings by
public makes healthy government.
Retail subsidies: The retailers have urged to government of UK to announce wage
support subsidy that can help them to protest various jobs in the retail industry under
corona virus situation. Government provides various subsidy to retailers to cope up with
employees rather than fire them from job. Government has provide 50 percent of wages
to employees. By these helps people who are belongs from poverty line can fulfill their
own and family needs and helps to bridge the economic gap by spendings into retail
goods or services. Government provides subsidies to retailers so that they can sell their
products in cheaper price in order to increasing consumers demand. Government support
hyper markets and super markets to sell retail goods or services at cheaper price.
Stimulus packages: Stimulus packages are provided by government in order to fulfill
public needs and improve in economy so that it can be a result of overall society growth
and development as well as nation. Government provides various packages in money
term or in goods or services directly by spending in retail industry by itself. In UK,
7
government provides various programs and sources to those people who are belongs from
poverty line. Government provides some programs in order to reduce poverty and bridge
the gap between poor and rich. Poverty stricken society or a nation doe not possess basic
necessities of living like proper housing facilities, safe and drinkable water, nutritious
food and medical aid in case of illness.
Government transfers: Government transfers related to paying by government to public
in order to meet their daily needs. Transfer payments usually refers to payments that are
made to consumers by government through various social schemes. In coronavirus
situation, government provides various schemes to consumers through direct payments or
employment wages that helps them to fulfill their basic needs. The government of UK
uses this in that manner so that it can increased profits and growth for the nation.
government transfers the wealth of the country in a proportionate manner so that
difference between the poor and rich can be reduced. These transfers can be given to
firms those are suffering from difficulties. This bridges the gap between government and
public income and spending that helps economy to rise up. These all things affects the
purchasing power of an individual and benefits to whole economy because spendings by
public makes healthy government.
Retail subsidies: The retailers have urged to government of UK to announce wage
support subsidy that can help them to protest various jobs in the retail industry under
corona virus situation. Government provides various subsidy to retailers to cope up with
employees rather than fire them from job. Government has provide 50 percent of wages
to employees. By these helps people who are belongs from poverty line can fulfill their
own and family needs and helps to bridge the economic gap by spendings into retail
goods or services. Government provides subsidies to retailers so that they can sell their
products in cheaper price in order to increasing consumers demand. Government support
hyper markets and super markets to sell retail goods or services at cheaper price.
Stimulus packages: Stimulus packages are provided by government in order to fulfill
public needs and improve in economy so that it can be a result of overall society growth
and development as well as nation. Government provides various packages in money
term or in goods or services directly by spending in retail industry by itself. In UK,
7
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government gives different stimulus packages and announced many types of schemes
that helps retail industries or public to cope up with their needs. It also increasing the
purchasing power of consumers and profitability of retailers. In corona virus situation
people are facing various challenges regarding monetary problems and fulfill their basic
needs but by government packages they are able to fulfill their needs and found monthly
wages.
Industry specified measures: There are various measures that a country takes while
seeing special industry analysis demand and supply or consumers spendings towards
economy. Government focuses for betterment of society so that they can invest towards
countries long term values. Government of UK provides various measures to retail
industries so that it can provide them source to paying wages to employees. So that
employees can purchase goods or services and fulfil their own and family needs. In
coronavirus situation government passes various budgets for different industries to
support them by financial needs. These all aspects further resulted in consumers sales as
it essential part of living and standard of living that also increased by all measures which
are done by government (Retail subsidies, 2019).
CONCLUSION
From the above report it has been concluded that Business economics covers those
problems that a managers of the firm faces. It gives information about the elements that affects
production capacity of an organisation. Economics for business helps firms to know about their
spending and production decision-making. Firm use economic tools such as demand and
supply . Demand refers to buyers wants to purchase a goods or services at a given price in a
given time. Supply analysis refers to goods or services are available to sell by suppliers at a
given time in a specific time period. Demand of the product and price has negative relation and
supply and price has positive relation but in some situation it can be change. There are various
factors that can affect demand and supply those are subsidiary and complementary goods,
income level, tax policies, climate and technology. Government and economic policies are the
main factors that affects the customer’s spending in retail goods or services that are poverty
programs, government transfers, retail subsidies, stimulus packages, and industry specified
measures.
8
that helps retail industries or public to cope up with their needs. It also increasing the
purchasing power of consumers and profitability of retailers. In corona virus situation
people are facing various challenges regarding monetary problems and fulfill their basic
needs but by government packages they are able to fulfill their needs and found monthly
wages.
Industry specified measures: There are various measures that a country takes while
seeing special industry analysis demand and supply or consumers spendings towards
economy. Government focuses for betterment of society so that they can invest towards
countries long term values. Government of UK provides various measures to retail
industries so that it can provide them source to paying wages to employees. So that
employees can purchase goods or services and fulfil their own and family needs. In
coronavirus situation government passes various budgets for different industries to
support them by financial needs. These all aspects further resulted in consumers sales as
it essential part of living and standard of living that also increased by all measures which
are done by government (Retail subsidies, 2019).
CONCLUSION
From the above report it has been concluded that Business economics covers those
problems that a managers of the firm faces. It gives information about the elements that affects
production capacity of an organisation. Economics for business helps firms to know about their
spending and production decision-making. Firm use economic tools such as demand and
supply . Demand refers to buyers wants to purchase a goods or services at a given price in a
given time. Supply analysis refers to goods or services are available to sell by suppliers at a
given time in a specific time period. Demand of the product and price has negative relation and
supply and price has positive relation but in some situation it can be change. There are various
factors that can affect demand and supply those are subsidiary and complementary goods,
income level, tax policies, climate and technology. Government and economic policies are the
main factors that affects the customer’s spending in retail goods or services that are poverty
programs, government transfers, retail subsidies, stimulus packages, and industry specified
measures.
8
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REFERENCES
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https://www.tutor2u.net/economics/reference/shifts-in-market-supply
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after-normalcy-4-forces-that-may-change-rules-of-the-game/2115460/
Demand and supply analysis. 2017. [Online]. Available through<
https://www.cfainstitute.org/-/media/documents/support/programs/cfa/prerequisite-
economics-material-demand-and-supply-analysis-intro.ashx>
Government transfer. 2020. [Online]. Available
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investopedia.com/terms/s/sector-breakdown.asp>
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https://www.investopedia.com/articles/basics/11/introduction-to-government-
subsidies.asp>
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https://www.investopedia.com/terms/s/stimulus-package.asp>
Supply and demand. 2020. [Online]. Available through
https://www.investopedia.com/articles/economics/11/intro-supply-demand.asp
9
Online
Change in demand curve. 2018. [Online]. Available through
https://www.tutor2u.net/economics/reference/shifts-in-market-supply
Change in supply curve. 2019. [Online]. Available through
https://www.financialexpress.com/economy/businesses-may-face-corona-effect-even-
after-normalcy-4-forces-that-may-change-rules-of-the-game/2115460/
Demand and supply analysis. 2017. [Online]. Available through<
https://www.cfainstitute.org/-/media/documents/support/programs/cfa/prerequisite-
economics-material-demand-and-supply-analysis-intro.ashx>
Government transfer. 2020. [Online]. Available
through<investopedia.com/terms/g/governmentpurchases.asp>
Industry specific sector. 2020. [Online]. Available through <
investopedia.com/terms/s/sector-breakdown.asp>
Poverty programme. 2020. [Online]. Available
through<https://www.investopedia.com/terms/p/poverty-trap.asp>
Retail subsidies. 2019. [Online]. Available through<
https://www.investopedia.com/articles/basics/11/introduction-to-government-
subsidies.asp>
Stimulus package. 2019. [Online]. Available through<
https://www.investopedia.com/terms/s/stimulus-package.asp>
Supply and demand. 2020. [Online]. Available through
https://www.investopedia.com/articles/economics/11/intro-supply-demand.asp
9
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