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

This report delves into the fundamental principles of economics, focusing on demand, supply, and market equilibrium within the context of business operations. It examines how demand and supply curves interact to determine prices, and analyzes the various factors that influence these curves, such as consumer income, the price of substitute and complementary goods, and consumer preferences. The report further investigates the impact of government policies and interventions, including quotas and price controls, on the food industry in the UK, particularly during the COVID-19 pandemic. It also explores how government measures aim to stabilize prices and ensure the supply of essential commodities. The analysis includes factors affecting supply, such as production costs, technology, and government regulations, and their impact on the overall market dynamics. The report concludes by highlighting the interplay of economic factors and their effects on business decisions and consumer behavior.

Economics for Business

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Economics is about study which depicts the living and values of people that need to be
analysed and which included production, distribution and consumption. Its all about consumer
who were ready to take run the business and for that they start doing certain activities (Arfah and
et.al, 2020). It studies about how individual undertakes their resources and allocate them
accordingly. Economics is study of satisfying the needs and requirement to generate the higher
profitability of the business enterprises. In this analysing the demand and supply of different
commodities reflect the overall stability of country. It includes micro and macro economics
factors that reflect the demand and supply of products and it is maintained by customers as well.
There are many factors that decide the condition of different products and commodities. In this
report different topics is being covered such as demand and supply, equilibrium of price and
demand and their curves is analysed. Apart from that government policies and intervention is
also being evaluated in this to determine the influences on food demand and supply.
TASK 1
Demand concern with the quantity of goods and services that customer wants to make the
purchase at specified prices and it also depend on the condition that must be fulfilled by
suppliers. Demand and price are inversely proportional to each other such as if increase in price
then there will be reducing in demand of the product. If there is decrease in price then, the
demand will be increased. For example, if price for tea are more than demand are less customer
will shifts towards to coffee which says that less price will help in better performance and higher
profitability for business organisation.
In the change of demand about to shift in total demand curves and shows the variety of
factors that impact demand and makes changes in the curve. The movement in demand curve
indicates many factors that affect the demand of goods and services such as preferences, income,
price of substitute and complements, expectation, population and other factors (CAMBA, 2020).

Change in demand- As changes in demand happens from the entire demand curve has
shift from left to right or right to left. The initial demand curve D0 shift to change state either
from D1 or D2. This changes done by some factors such as shift in taste, changes in population,
change in income of customer and price of substitute, price in complementary, future changes in
the income factors determine the shift in demand. In UK, there are also some important that
impact the demand and supply of product and lead to certain fluctuation in the supply of
commodities.
Factors affecting demand:
Price of product- As the price of product is important factor that influence the demand and
supply in market as there is inverse relations in the price for the goods and amount of
product and service that customer willing to purchase. Price of product is deciding the
purchasing power of customer as they want to buy those product which is low in price. In
the context of UK, fruits and vegatables, price factors affects the demand of prevailing
goods and service. If there is increase in price of food services the demand shift towards left
and price for food will decrease (Cleff, 2019). As in the hike in price of tomato then the
demand of pepper will rise and this reflect the influence of price of product and it should be
considered properly to stabilise the supply of different commodities.

Consumer income- In the context of UK vegetable and fruits, the consumer income
highly impacts the demand of fruits and different vegetables. If there is increase in the
income the consumption and purchasing of the items will increase on the other hand if there
is decrease in the income of customer then it will decrease the purchasing power of them.
As, income is substantially rise for the customer will going to purchase high quality of
goods and services for demand prevailing in the market.
The price for substitute goods- The price of goods that are substitute in nature impact
the demand of goods and services. For example, price of tea is rising and then coffee has
lower price for the customer will be better options and demand will reduce for tea. In the
context of UK, if the price of tomato is increase then the demand of pepper will eventually
increase as customer will prefer to buy substitute product and want to avail the profit while
purchasing.
Price of complementary goods- In this refers to two product that were used together and
complementary for each other (Ferreira Gregorio, Pié and Terceño, 2018). For example pen
and ink these are types of complement goods. If the price of pen is rising the demand of ink
will also decrease as people will less tend to buy the ink as increasing the price of pen. In
this it shows that hike in price of pen will reduce the demand of pen as customer using these
the items together. In the context of UK, the price of such products also influences the
demand of each other and their prices are related to one and other demand.
Taste and preferences of customer- The taste and preference of the customer also
influence the demand of goods and services and thus greatly impact the overall demand and
supply of products. In the context of UK, this factor consider the important one as it decide
the demand of the concerned fruits and vegetables. As, if many of the customer do not like
particular fruit then it will purchase the another one. If there is changes in taste and
preferences of customer then it should be effectively design and evaluate by the market to
effective flow in the demand of the item.

(Sources: movements in demand.2021)
The changes for the quantity demand in the terms of movements which along
demand curve and reason for the change in price of the goods and services.
Changes in quantity demanded- Changes in quantity demanded concern with
shifting in the demand curve along with existing one. If the change in price is caused by the shift
in supply curve due to change in demand of the goods. In the context of UK, the fruits and
vegetable demand curve indicates the demand due to change in quantity and affect the demand in
the products.
Supply: This is quantity that is used as resources such as business, labour,
financial assets that are available in the marketplace and accordingly supply with the received
demand.

Change in supply refers to the movement to entire shift curve and reason could be many
such as taxes, production cost and technology and other factor also (Hummel, Pfaff and Rost,
2018). This could go either left or right depend on the situations or factors. The initial supply S0
moves to changes either to S1 or S2. This could be happened through many factors and reason
which influence the supply of goods and services. In the context of UK, the fruits and vegetables
supply can be changed due to change in factors and that also leads to certain factors.
Factors affecting supply-
Reducing the cost for production- It indicate the show in business for different prices
and this occur due change in policies of top management. Cost includes wages, raw material,
purchases that depicts the price for goods and that wil going to affect the business goods and
different services.
Technology- This is also important factor that impact the supply of concern goods and
services as if there is increase in the innovative and well improves quality then it will improve
the supply of products. In the context of UK, if fruits and vegetables are of good quality then
customer will tend to purchase those and increasing in the supply of fruits.
Factors price- Factors that include in business such as material, equipment and machines
that uses in the production process (LESTARI and et.al., 2020).

Covid: After the Corona virus many manufacturer face problem in regard of
manufacturing that impact on the business in negative manner. At this situation keep their
factories shut down so restaurant are not getting processed food easily.
Government policies- These policies also influence the supply of concerned goods and
services as they decide and take important steps regarding demand and supply of products. For
example changes in tax will going to affect the cost and impact the supply and production of that
commodity.
The changes of quantity supply is about movement along the curve and that happens due to the
changes in price of goods and services.

Changes in quantity supplied- This refers to the movement in supply curve along
existing curve which is S0. In the context of UK, the effect of supply of fruits and vegetables
impact the business and that happens due to changes in various factors that is discussed above
(Mulhearn and Vane, 2020).
.
Equilibrium- The price is all about the show quantity demand and quantity supply are
equal to each at other after coming specific period of time. This point shows that in demand and
supply equilibrium price is equal and that concluded with the point of intersection. In the context
of UK, this price shows when demand and supply is equal to the good and services. When seller
and buyers are intersected it depicts the equilibrium point. Equilibrium shift concerned with the
demand and supply curve when it is reducing and it is increasing in supply when it is increasing.
Price Quantity Demanded
1.00 800
1.20 700
1.40 600
1.60 550

Price Quantity Demanded
1.80 500
2.00 460
2.20 420
In this when price are decreasing the demand is rising as they are inversely proportional to each
other as they were moving opposite to one another.
Price Quantity Supplied
1.00 500
1.20 550
1.40 600
1.60 640
1.80 680
2.00 700
2.20 720
(Source: Equilibrium for demand & supply. 2021)

This tells that price are more likely to supply and it shows the positive relation for the
price and supply. This reflect the inverse relation of price and demand. In the context of UK, this
relation with the fruits like tomato and pepper also, where increase in price and decrease demand
and there positive relation between price and supply. If decrease in price of the tomato will lead
to decrease in supply of tomato. In the situation of equilibrium point they were come to the point
where they were equal.
TASK 2
UK government as also taken some steps for increasing demand and supply in the year 2020
and also took certain initiatives to enhance the productivity and situation of the nation. So,
during the situation of Covid-19, whole country has suffered lots of difficulties regarding the
purchasing and selling of goods and services. To fix the issue government has formulated
various schemes for welfare of the country and could bring back the stability in price of
different commodities (Pivorienė, 2017). So, to cure that UK government has issues quotas,
price controls, money, taxation, fiscal policies, social welfare and poverty programmes etc.
In this period, government has thanks committee and allow the efficient food supply to
needy areas and poor people. To reduce the problem government official will work with
near retailers and assist them to increase the demand and include certain key factors to
support the structure and re-establish the food industry and all other sectors. Some of the
intervention are as follows-
Quotas- This concern with providing the special category to poor people by government
as they offer food at lower price. Poor people who were not able to purchase the food or not
able to fulfil the basic needs. To fix this issue government gives quality goods and services
and provide quotas to reduce the cost and will help them in further prices.
Price control- Government has tried to control the excessive price and control the
equilibrium of the price. In the context of UK, they have taken significant steps in
controlling the price of fruits and vegetables and other food items to provide at lower prices.
Government transfers- UK also take important decisions regarding the better demand
and supply of goods and services which will help in increasing the efficiency. UK using this
steps to improve the stability of demand and supply so that customer able to make proper
purchase and leads to improving in food quality. This improve the purchasing power of the