BM533 Contemporary Business Economics Report: Micro and Macro Analysis

This report, prepared for the BM533 Contemporary Business Economics course, delves into microeconomic principles by examining the law of demand and supply, detailing movements along the respective curves, and identifying the factors that influence shifts in these curves. The analysis uses the retail giant Wal-Mart as a case study. Furthermore, the report provides a comparative analysis of economic theories and models, contrasting those prevalent in the 20th century with contemporary economic thought of the 21st century, and then relates these theories to modern business practices. The report includes an introduction, detailed task analyses, and a conclusion, supported by references to academic sources.

BM533
Contemporary
Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Explain the law of Demand, movement along the same demand curve and changes in
demand curve with factors...........................................................................................................4
1.2 Explain the law of Supply, movement along the same supply curve and changes in supply
curve with its factors....................................................................................................................7
TASK 2............................................................................................................................................9
Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these modern business practices....................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The supply and demand model describes how prices vary as a result of a balance between the
availability of the product on each (price supply) and the desires of those with the purchasing
power in each price (demand). The graph depicts a right-to-price increase in demand from D1
and consequently the quantity supply curve (s) moving to D2 with a new market clearing needed
to reach the equilibrium point.
Microeconomics is a branch of economics that studies how the individual components of an
economy, families and firms, typically decide the allocation of limited resources in those markets
Are where goods and services are bought and sold. Microeconomics examines how these
decisions and behaviors affect the supply and demand for goods and services, which determine
prices and how, in turn, determine the supply and demands of prices, goods and services Does.
The opposite happens in macroeconomics, which includes the sum total of activities related to
growth, inflation, and unemployment. Microeconomics also discusses the effects of national
economic policies (such as changing levels of taxation) on previously stated aspects of the
economy.
This project report consists of study of law of demand and supply and concept of contemporary
economics with context to 20th and 21st century. The chosen big retail company is Wal-Mart;
which is one of the rank first retail and wholesale organization in the world.

TASK 1
1.1 Explain the law of Demand, movement along the same demand curve and
changes in demand curve with factors
Law of Demand: The law of demand "when other things remain the same" states that when the
price of a commodity is low, the quantity demanded of it becomes high. On the contrary, when
the price of the commodity is high, the quantity demanded decreases. The law states the inverse
relationship between the price of the item and the quantity demanded (Andrews, 2019).
It is clear from these definitions that the law of demand states the inverse relation between the
quantity of the commodity and the price of the commodity, when the price of the commodity is
equal to other things, then the demand for it decreases when the value of the commodity
decreases. Then the quantity demanded of that item increases. But the law of demand does not
tell how much the quantity of the commodity will increase if the price of the commodity
decreases and how much quantity of the commodity will decrease when the value of the
commodity is high.
Movement along the same demand curve
Since there are many variables that influence the quantity demanded, it is now clear that the
demand curve is constructed assuming that the determinants of demand other than price remain
unchanged. What happens when one of the other determinants changes of the question? We have
to build a new demand curve: the whole curve shifts. If one variation of one of the other
determinants causes an increase in demand - for example later on to an increase in income - the
entire demand curve will shift to the right and, in correspondence of each price, the quantity
requested will be greater. At the price p a quantity equal to Q0 was requested, and now a quantity
Q1 is requested D1 is not necessarily parallel to D0. If instead a variation of one of the other
determinants demand causes a reduction, the curve will move to the left. To distinguish between
curve displacements and movements along the curve, the variation of the demand function by the
variation of the quantity demanded (Volchkova and Turdyeva, 2016).

The development in the interest bend happens when the ware experience transforms into both
interest and value, making the bend moves a specific way. The development along the interest
bend speaks to a change in the two components for example cost and amount request, starting
with one point then onto the next. Different things stay unaltered when the amount of interest
changes because of an adjustment in the cost of an item or administration, bringing about a
diminishing popular. Development along the bend can happen in any of two headings:
 Upward development: Eludes to a withdrawal of interest, to put it plainly, a decrease
popular because of cost increments.
 Downward development: It alludes to the extension popular, that is, the interest for an
item or administration increments as costs fall (Curtis Jr, 2018).
In this manner, a more prominent amount of the great is requested at lower costs, while when the
costs are higher, the interest diminishes.
Changes in demand curve with its factors:
Changes in demand curve indicates shifts in demand curve due to factors other than price; here
price is constant and other factors changes left and right shift of demand curve.

Factors effecting shifts in demand curve:
Disposable income: generally when the disposable income increases, the demand for the
considered asset also increases, if its price remains stable; the exception concerns "inferior"
goods;
Prices of related goods: generally the demand for a good (butter) drops when the price of a
replaceable good (margarine) decreases, even if the price of the first good remains unchanged;
moreover, the demand for a good (sugar) will increase when the price of a complementary good
(coffee) decreases;
Variation of tastes and preferences: obviously a good that becomes "fashionable" will see its
demand increase even if the price remains unchanged (Estola, 2017).
Population: the increase in population determines an increase in purchases.
Particular influences: for example in the automotive sector, the availability of means of
transport, the safety of cars, market expectations on the increase in prices in the short / long term
(Stoneman and Bartoloni, 2018).
If any of these conditions vary, the demand curve shifts:

 An increase in demand at each price level implies that the demand curve shifts to the
right;
 A decrease in demand at each price level causes the curve to shift to the left.
1.2 Explain the law of Supply, movement along the same supply curve and
changes in supply curve with its factors
Law of supply: The supply curve is the Cartesian representation of the economic offer of a good
or service. The supply curve is based on a mathematical function in which the price is the
independent variable (input) and the quantity of production of the good depends. As is easy to
understand, the behavior of each company consists in maximizing profit (Kolmar, 2017).
Therefore, other things being equal, to maximize profit the higher the market prices of an asset,
the greater the quantity of the good that a company is willing to produce. The supply curve is
therefore an increasing function with the price. For example, when the price is € 1.00 the
company's production quantity is 100 units / day. A possible increase in the sale price to € 2.00
pushes the company to also increase the production quantity to 140 units / day (Becchetti, Bruni
and Zamagni, 2019).
The supply curve has a positive slope due to the offer law. According to the law of the offer, an
increase in the price generates an increase in the quantity offered of a good or service, and vice
versa (Lin, 2018).
Movement along the supply curve:
Any changes in supply curve due to increase or decrease in price; while taking other factors
constant is known as movement along the supply curve. It is positive and direct relationship
between price and quantity supplied; which states that, quantity supply increases with the
increase price and decreases with the reduced in price of the product. This shows positive
relationship between two.

Here, in this above diagram; quantity Q1 is moved to Q2 with the increase in price from P1 to
P2. Where slope is same; only point from A to B shown movement (Nechyba, 2019).
Changes in supply curve with its factors:
The market offer depends on various factors, among which the most important is the price. But
there are also others such as production costs, technical innovation, laws, etc. The supply curve
indicates what the quantity is offered by firms at a given time for each price level.
If at a later point in time, as a result of a change in technology, the companies, for the same price
and the other factors that influence the offer, offer a greater quantity of the good in question, the
supply curve shifts towards right (Deng, and et.al., 2017).
Clearly, the shift to the right of the supply curve will also lead to a new equilibrium position, the
equilibrium price becomes (lower than the previous equilibrium price) and the equilibrium
quantity (greater than the previous equilibrium quantity). If the offer should, instead of
increasing, decrease, this will lead to a shift of the supply curve to the left:

Factors affecting shifting in supply curve:
There are many variables that they can cause shifts in the supply curve; here are the most
important:
Production factor price: When the price of one or more factors increase, the market offer
decreases.
Technology: By reducing business costs, technological progress increases the quantity offered.
Expectations: If future prices are expected to rise, the offer is reduced today to increase stocks
and sell in the future at higher prices (Currie, Peel and Peters, 2016).
Number of sellers: The greater the number of sellers, the greater the offer of the good.
TASK 2
Compare and contrast emerging theories and models in 21st century
contemporary economics with those of the 20th century, and relate both of
these modern business practices.
The contemporary economics is an address economic thought that, in the name of re-confirmed
premise of ' classical economics , denounces the substantial violations of competition perpetrated
by concentrations monopolistic shadow of laissez-faire and therefore calls for government
measures to reaffirm the actual freedom of market and thereby ensuring respect for political
freedoms . Neoliberal economists, such as the Austrians Friedrich von Hayek and Ludwig von no
longer insist on the hypothetical advantages of free competition, but on the practical drawbacks
of State intervention , considered easy to degenerate into compulsion, heavy, always late and
often ineffective. From a philosophical point of view, it would be partially associated with
libertarian theories, except that the terms “liberal " and "neoliberal" are sometimes used with a
derogatory connotation (Nermend and Łatuszyńska, 2020).
In recent years, say after the 2008 world economic crisis and the reduced economic growth in the
EU, several economists, politicians and sociologists have proposed that the main cause of this
crisis is attributable to "Neoliberalism". As it is known that contemporary economics is an

economic doctrine which tends to reduce the influence of the state on the economy, allowing
market forces, guided by the rules of competition, to regulate the balance of the economic
system. Since the 1980s, several countries have initiated structural policies to increase internal
competition through deregulation and opening their economies to foreign capital. An economic
approach that, in the name of the reconfirmed premises of the classical economy, denounces the
substantial violations of competition perpetrated by monopolistic concentrations in the shadow
of laissez faire and therefore calls for measures to restore effective market freedom and thereby
guarantee respect even political freedoms (Volynskii, 2017).
Furthermore, according to the sociologist, the development of the digital economy, to the sound
of increasingly intrusive monopolistic giants, suggests a neoliberal project. In fact, according to
Merkulina, in an increasingly " data-centric " society that has created the alliance between
"Neoliberalism" and "Silicon Valley", Europe, excluded for technological reasons from these
games, if it wants to survive will have to react legally.
Contemporary economics maintains that the market should be free from the distorting
interventions of trade unions, which prevent the creation of a natural system of winners and
losers. The passions are used by contemporary economics to anesthetize the spaces of political
criticism and to accept the serious consequences of economic decisions such as: cuts in pensions,
lengthening of the retirement age, reduction of workers 'rights and, in general, reductions in
citizens' protections (Nerlove, 2016). Contemporary economics is the recovery of nineteenth
century thoughts related with the twentieth century free enterprise financial radicalism. These
thoughts incorporate monetary advancement arrangements, for example, privatizations,
grimness, deregulation, facilitated commerce and decreases out in the open spending so as to
expand the job of the private division in the economy and society. These market-based thoughts
and the arrangements they motivated comprise a worldview shift from the after war Keynesian
accord that kept going from 1945 to 1980 (Sutanto, 2018).
The definition and use of the term has changed over time. As an economic philosophy,
contemporary economics emerged among liberal European scholars in the 1930s as they
attempted to trace a so-called "third" or "middle" way between the conflicting philosophies of
classical liberalism and socialist planning. The impetus for this development arose from the
desire to avoid repeating the economic failures of the early 1930s, which neoliberals mainly

attributed to the economic policy of classical liberalism. In the decades that followed, the use of
the term "neoliberal" tended to refer to theories that diverged from more laissez-faire doctrine of
classical liberalism and which instead promoted a market economy under the guidance and rules
of a strong state, a model that came to be known as the social market economy (Ofurum and
Gabriel, 2019).
Changes from 20th century to 21st century in contemporary economics:
1. To begin with, to an enormous degree to address the conceivable extension of "free"
showcases under contemporary economics, and the logical inconsistencies between corporate
elements and strength, for example, Google by Google and Monopolies as Microsoft.
2. Furthermore, the thought that contemporary economics under our lives, personality and
subjection are mutilated by "enterprising" convictions; conduct and believing are exceptionally
stressed.
3. Different sorts of rentals are controlled by social orders and economies, for instance home
possession, licensed innovation imposing business model and market control. As indicated by
British scholastics, perpetual for youngsters, lease can be characterized as "separating salary
from property or property, property or control or uncommon or misleadingly uncommon".
Comparing 20th and 21st century with modern inequality theory of economics:
Economic inequality refers to financial contrasts between people, populace gatherings, or
gatherings of nations. Financial disparity in some cases alludes to pay imbalance, riches disparity
or riches hole. Business analysts commonly center around three quantifiable frameworks for
looking at monetary imbalance: riches, pay, and utilization. The issue of financial imbalance is
pertinent to the thoughts of correspondence, equity of items and fairness of chance. Financial
disparity differs between social orders, chronicled periods, monetary structures and frameworks.
The term may allude to the transmission of salary or riches over a specific period or the
adjustment in pay and riches over a significant stretch. There are a few numerical tables for
estimating monetary imbalance. The coefficient is a broadly utilized list, yet there are a few
different strategies (Cherrier, 2017).

In present day strategic approaches; Inequality hypothesis is utilized to figure distinctive
monetary conditions for various countries. In view of this correlation; Countries are
classifications as immature, creating nations and created nations. Components taken for
correlation are: Unemployment, per capita salary, and proficiency, human record and future
chances. In the mid twentieth century, the premise of correlation was the per capita pay for every
country; wherein the cutting edge economy has totally denied at the phase that these
measurements are conflicting to keep up the nation's outcomes (Cherrier, 2017).
GDP based comparison:
From the twentieth to the 21st century, the development of any economy in nations is estimated
by total development or an expansion in the commitment of GDP; with the assistance of its
different segments, for example, income, capital consumption, send out/import and government
venture. Be that as it may, in present day business practice; this idea has vanished. Presently,
different nations are demonstrating their improvement potential with improving the solidness of
nature; For instance, it is changing measures to deal with the ozone layer, attempting to plant
more nurseries and plants around outside air. Recently created nations have started to esteem the
land and its temperament to shield their countries from looming calamities, for example, loss of
assets, environmental change and numerous different ailments. Hence, proportions of natural
control are rising before GDP by nations to feature the viability of created nations (Cherrier,
2017).

CONCLUSION
So, on the bases of above evaluation, it can be analyzed that; there are some exceptions to such
rules that apply to the relationship that exists between the prices of goods and demand. One of
these exceptions is a Giffon good. It is that which is mainly considered like bread or rice, for
which there is no practical substitute. In short, demand for Giffen will increase when the price
rises, and it will fall when prices fall. Demand for these goods is on an upward slope, which goes
against the laws of demand. Therefore, the general response (rising prices triggering the
substitution effect) would not exist for Giffen goods, and price increases would continue to drive
demand.

REFERENCES
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