Demand and Supply Analysis of Polo Mints in the UK: An Economic Essay

Desklib provides past papers and solved assignments for students. This essay analyzes the demand and supply of Polo Mints in the UK.

Economics for Business
1

Contents
Essay................................................................................................................................................3
References:....................................................................................................................................14
2

Essay
The essay will explain about the demand and supply analysis which helps in determining the
factors of the Polo mints price in the UK. In this essay different operation of markets which helps
in investigating the supply and demand will be explained. In this assignment, the equilibrium
will be explained by using the diagram of the supply and demand. The factors that are changing
the leads of the demand and supply will also be explained. The essay will also elaborate on the
impact on the price of the change in demand and supply. Polo Mints is the product of the breath
mint which was introduced in 1948, in the United Kingdom. The product has the flavoured of
peppermint which provides the taste of the cool and fresh mint. In this essay, the factors that are
changing the demand and supply of the Polo Mint will be explained with the help of the
economic diagrams.
Supply: Supply can be defined as it is the amount of quantity supplied of the product which the
producers plan to sell at the particular price for the definite period (Varian, 2014).
Law of supply: According to this law if there is the increase in the quantity supplied than the
price will also be raised up and if there is the decrease in the quantity demanded than there is the
reduction in the price.
Supply curve: It is the geographical representation which states the correlation between the
quantity supplied and the price of the goods and services for the given period. In this
presentation, on the horizontal axis, the quantity supplied will appear and on the vertical axis
there will be a price of the goods and services will appear (Stürck, et. al., 2014).
3

Source: Economic.com
Figure: Supply curve
From the above diagram, it is concluded that if the supply curve of the Polo Mints will shift to
the right if there is an increase in production efficiency. The supply curve of the Polo Mints will
shift to the left if there is a decrease in production efficiency. The supply curve of the Polo Mints
will shift to the right when there is improved technology and lower taxes on the product
(Henchion, et. al., 2017). The supply curve of the Polo Mints will shift to the left when there are
obsolete technology and higher taxes on the product.
Factor that shifts the supply curve: The supply curve will shift right to the left when there is a
change in the production cost and the other related factors. There are many factors that are
causing the change to the supply curve which is stated below:
4

Source: www.khanacademy.org
Figure: Factors that shift the supply curve
Prices of the other goods: If the price of one good increase than the supply of the other good
may decrease. For producing the larger quantities they have to relocate the resources so that
more profit can be generated (Stürck, et. al., 2014).
A number of sellers: The supply curve will be a shift to the right if the numbers of sellers will
be increased as it results in more supply.
If the size of the market and the number of the sellers of the Polo Mint increases than the supply
will also tend to increase and the supply curve will shift to the right. If the size of the market and
the number of the sellers of the Polo Mint decreases than the supply will also tend to decrease
and the supply curve will shift to the left (Henchion, et. al., 2017).
Price of relevant inputs: The supply curve will shift to the left if the cost of the resources will
be increased than the supply will be declined as the sellers will be less inclined to the same
quantity.
The supply of the Polo Mints will increase if the raw material used in the production goes down
as it results in a shift to the right of the supply curve. The supply of the Polo Mints will decrease
5

if the raw material used in the production goes up and it results in a shift to the left of the supply
curve.
Technology: The supply curve will shift to the right if the production efficiency will be
increased due to the advancement of technology (Jones and Lomas, 2015).
The supply of the Polo Mints will shift to the right if the company was using the advancement of
the technology as it will decrease the cost of the production. The supply of the Polo Mints will
shift to the left if the company was using obsolete technology as it will increase the cost of the
production.
Expectations: The supply curve will shift to the left if the expected prices by the sellers will be
increased than the quantity supplied currently will be decreased as they will supply more when
there is the increase in the price.
The supply of the Polo Mint will be an increase or shift outward when expectations regarding the
future period are that the demand of the polo mint will increase and there will be the increase in
the production and the future prices. The supply of the Polo Mint will be decreased or shift
inward when expectations regarding the future period are that the demand of the Polo mint will
decrease and there will be the decrease in the production and the future prices.
Government policies of the UK: The supply will be increased when the government of the UK
imposes the subsidy on the goods and services but the supply will decrease if the tax will be
imposed on the goodwill.
The supply of the Polo Mint will increase when the government imposes the subsidy on the
peppermint goods and the supply curve will shift to the right. But if the supply of the Polo Mint
will decrease than the demand curve will shift to the left and supply will get decreased when the
imposition of the tax is higher.
Demand: Demand can be defined as the amount which the consumers plan to demand the
quantity of the goods and services which the consumers are able to buy at the particular price for
the definite period.
6

Law of demand: According to this law there is the inverse relationship between the demand and
price as if the price of the product is higher than the quantity demanded will be lower, keeping
all the factors equal and vice versa (Jones and Lomas, 2015).
Demand curve: It is the graphical representation which states the relationship between the
quantity demanded of the goods and services and the price of the product for the given period of
time. In this presentation, on the horizontal axis, the quantity demanded willbe appear and on the
vertical axis, the price will appear.
Source: economics guide. me
Figure: Demand curve
From the above diagram, it is concluded that if the price of the Polo Mint will increase than the
demand of the products of the Polo Mint will get lower and if the price of the Polo Mint
decreases than the demand of the Polo Mint will start increasing.
Factor that shifts the demand curve: There are many factors which affect the demand curve.
The demand curve will be the shift to the right if there is an increase in the demand but the
demand curve will be the shift to the left when the demand for the goods and services decreases.
7

Source: www.khanacademy.org
Figure: Factors that shift the demand curve
Income: The demand curve will be shift according to the income of the consumers. If the
consumer has higher income levels than the demand curve will shift to the right as they have
enough money to buy more. The demand curve will shift to the left if the income of the
consumer will be declined as they don’t have enough money to spend on such products.
The demand curve depends upon the income of the consumer which is buying the Polo Mint. If
the consumer has a greater level of income than he can easily buy the products of the Polo Mints
and the demand curve will shift to the right. But if the consumer of the Polo Mint doesn't give
the good income than he will not prefer to buy this mouth freshener and the demand curve will
shift to the left.
Normal and inferior goods: Normal goods are those goods whose demand rises when the
income rises. Inferior goods are those goods whose demand will be declined when there sit eh
rise in the income.
The price of the Polo Mint in the UK is £ 0.60 which is reasonable and affordable for every
consumer. This product can be bought by lower-income consumers easily. So if the income of
the consumer's increases than they will demand something different for their mouth freshener
8

instead of the Polo Mint but if the consumer has the lower income than they will buy the Polo
Mint as it is affordable for them.
Change in the taste and preferences: The demand for the product changes according to the
tastes and preferences. If the tastes are preferred by the consumers than the demand will be
rightward but if the tastes are not preferred by the consumers than the demand will be shifted to
the leftward (Obizhaeva and Wang, 2013).
The demand of the Polo Mint shifts to the right when the company introduces the new trend or
taste in the flavour of the peppermint. Consumers like different or innovative tastes so if the
flavour of the new mint is favourable among the consumers than the demand will increase but if
the flavour of the new mint is not favourable among the consumers than the demand will
decrease.
The composition of the population: The demand for the product also gets affected by the
number of population. As in the United States, the population is rapidly increasing so demand for
the things is also increasing. Higher demand is shifting the demand curve to the rightward (Huq,
et. al., 2014).
The demand for the Polo Mint is higher in the UK as the number of the population is greater. The
demand curve will shift to the right as there sit eh higher demand but in the other countries where
the population is lower the demand is declining and the demand curve will shift to the leftward.
Related goods: The demand is getting affected by the related goods which are the substitutes
and complementary goods. Substitute goods are the one which can be used in the place of the
other goods and services. If the substitute goods have lower prices than the demand for the other
product will be decreased. Complementary goods are the one which is used together so their
demand depends upon the price level. The demand curve will shift to the right if the price of the
compliments falls and the demand curve will shift to the leftward if the price of the compliment
rises (Obizhaeva and Wang, 2013).
If the other companies which are dealing in the peppermint product will serve the products at the
falling price than the demand of the Polo Mint will decrease and the demand curve will shift to
9

the left. The peppermint products such as the water mint and the spearmint, if the prices of such
product increase then the demand of the Polo Mint also increases.
Equilibrium of demand and supply curve: The equilibrium is the state in which demand and
supply are balanced. It is the point of the intersection which is represented at the demand and
supply curves interaction point. It can also be defined as the pair of the price-quantity where the
quantity supplied is equal to the quantity demanded. The equilibrium of the supply and demand
is the result of the interaction between the producers and the consumers in the competitive
market (Huq, et. al., 2014). The price stays the same at the time for the goods and services at the
time of the equilibrium. Quantity demanded by the consumers is equal to the quantity supplied
by the suppliers, indicates the point of the equilibrium. But the market equilibrium changes
which are stated below:
Figure: Equilibrium of demand and supply
Source: economicshelp.org
Equilibrium gets affected with the increase in the demand: When the demand of the goods
and services increases and the supply remains unchanged, the demand curves shifts to the right
and causes the equilibrium to increase in price.
10

Figure: Change in the demand on the equilibrium price
Source: homework.com
Equilibrium gets affected with the decrease in the demand: When the demand of the goods
and services decreases and the supply remains unchanged, the demand curves shifts to the left
and causes the equilibrium to decrease in price (Jones and Lomas, 2015).
Equilibrium gets affected with the increase in the supply: When the supply of the goods and
services increases and the demand remains unchanged, the supply curves shift to the right and
causes the equilibrium to decrease in price.
11

Figure: Change in the supply on the equilibrium price
Source: homework.com
Equilibrium gets affected with the decrease in the supply: When the supply of the goods and
services decreases and the demand remains unchanged, the supply curves shift to the left and
causes the equilibrium to increase in price.
Impact of change in the supply on the price: If there is the increase in the supply of the goods
and services and the demand remains unchanged then the equilibrium price will be lower and the
equilibrium quantity will be higher. If there is the decrease in the supply of the goods and
services and the demand remains unchanged then the equilibrium price will be higher and the
equilibrium quantity will be lower (Jones and Lomas, 2015).
Impact of change in the demand on the price: If there is an increase in the demand and the
supply remains unchanged then the equilibrium price and the quantity will be higher. But if there
is a decrease in the demand and supply remains unchanged then the equilibrium price and the
quantity will be lower.
12