Analysis of Supply and Demand for Polo Mints: An Economic Perspective

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Economics for Business
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Table of Contents
Introduction......................................................................................................................................3
Description of the Brand..................................................................................................................3
Knowledge of Statistic supply and demand analysis.......................................................................3
Demand of Polo Mint..................................................................................................................3
Demand Curve of Polo Mint........................................................................................................4
Supply curve of Polo Mint...........................................................................................................4
Description of Theoretical factors along with the reasons that shift the curves of supply and
demands...........................................................................................................................................5
1. Theoretical factors and the reasons to shift demand curve......................................................5
2. Theoretical factors and the reason to shift supply curve.........................................................7
Concept of Equilibrium by using the supply and demand diagram.................................................9
Impact upon price due to the change of demand or supply using academic theories....................10
Reasons behind the change in Demand and Supply......................................................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................12
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Introduction
In economics, supply and demand can be considered as two foundations. In order to make the
analysis of demand and supply, any organization needs to prioritize the demand and supply
individually (Chow and Niu, 2015). The following assessment has developed in order to
emphasize the understanding and knowledge of static supply and demand analysis. In this regard,
assessment has highlighted the explanation of all the theoretical factors, which can be effective
to shift the supply and demand curve of Polo mints. This is a brand of breath mint, which is
based on United Kingdom and owned by Nestle. This assessment has made by based on this
brand. Moreover, it has demonstrated the explanation of equilibrium by using the demand and
supply diagram. In the last part, the brief explanation of factors, which lead Nestle toward
change in supply and demand of Polo Mint have included in it. In addition, assessment has
shown all the impacts of supply and demand upon price as well.
Description of the Brand
Polo Mints is the brand of breath mint and its defining feature can be considered as the hole in
middle. The peppermint flavored Polo was produced first in the year 1948 in United Kingdom.
This was made by the employee John Barge well at the Rowntree’s Factory, York. In this case, it
can be found that there is a reason behind the name “Polo” (Fang et al., 2016). This was derived
from the word “Polar” and it is referencing fresh, cool taste of mint. The tagline of the brand is
“The mint with the hole” and it was owned by Nestle. Nestle have introduced many type of Polo
mint such as Spearmint, Fruit, Polo Gummies, Sugar free, Smoothies etc. Moreover, Polo is near
about 1.9 centimeters or 0.75 in diameter along with 0.4 centimeters or 0.16 in thick. Moreover,
there is a wide hole with 0.8 centimeter or 0.31in (Fang et al., 2016). Polos are sold usually in the
individual packs of the 23 mints and that measure near about 10 cm tall.
Knowledge of Statistic supply and demand analysis
Demand of Polo Mint
When clients want a product along with willing to pay for that, this can be told that there is the
demand for that particular product. Before the manufacturer can sell Polo mint, there should be a
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high demand of that product (Fang et al., 2016). Demand for Polo mint cannot increase just only
for the needs and requirements but the capability and willingness of consumers to purchase the
product with its price can be considered as the other reasons.
Demand Curve of Polo Mint
In economic, demand curve can be considered as the graph, which is depicting the relationship
between the price of certain commodity in case of Polo mint and amount of the product
(Caballero et al., 2016). Moreover, consumers are capable and willing to purchase the product in
the given price as well. This can be considered as the graphical representation of the demand
schedule.
Number of Polos
Figure 1: Demand Curve
(Source: Basu and Bundick, 2017)
The above graph has shown the demand curve, which is based on the number of Polos and the
price (Auclert and Rognlie, 2018). The line on the graph highlights the process in which the
changing in price can influence the change in demand for Polo mint. This can be referred to as a
demand curve and it makes the specification of the amount of Polo mint based on its demand in
particular price (Basu and Bundick, 2017).
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Supply curve of Polo Mint
Supply curve can be considered as one of the graphical representation of correlation between the
price of Polo mint and the amount for a certain period. In the typical illustration, prices are
denoted on left vertical axis and amounts are denoted on horizontal axis (Ziel and Steinert,
2016).
Figure 2: Supply Curve
(Source: Auclert and Rognlie, 2018)
Following graph has been shown the relation between price and quality in a graphical way. From
the graph, it can be told that with the increment of price, amount of Polo mint is rising as well by
Nestle.
Description of Theoretical factors along with the reasons that shift the curves of supply and
demands
1. Theoretical factors and the reasons to shift demand curve
The demand curve shows that how consumers are willing to purchase Polo mint at the given
price. As an outcome, demand curve shifts constantly right or left and based on the direction of
shift, it equals an increase and decrease in demand of Polo mint. There are many theoretical
factors, which can influence the demand curve (Baumeister and Hamilton, 2017).
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 Income
A change in the income can make impact on the demand curve in various ways. In this regard,
Polo mint increases with the growth of income. Moreover, the higher income shifts the curve of
demand toward right. As opined by Bartoli et al. (2016), the cause for it is that with high
revenue, consumer can afford to purchase more Polo mint. For example, consumers with low
income will not eat Polo mint. Tastes and Trends
As in United Kingdom, eating Polo mint become a fashion or trend and this the reason for
demand curve for shifting toward the right. According to Greenwood et al. (2015), the demand
curve can shift toward left if a new trend of any new product develops and Polo mint goes out of
trend again. Prices of Polo Mint
Two types of related good are there, which shift the demand curve in the opposite directions.
Those types are such as complements and substitutes. This can be found that if price of any
product is decreasing then this can reduce the demand of another high price product. As opined
by Feenstra et al. (2018), Nestle need to prioritize this fact and they have to set the price of Polo
mint considering other this kind of product price.
 Expectations
Consumer’s expectations in future have an essential role on demand. Moreover, the future
expectations of Polo mint can change the demand of this (Soderbery, 2015). If consumers
expected prices in future for Polo mint then this can increase the demand of it. Therefore, the
demand curve shifts toward the right. Size and composition of population
Large population of United Kingdom can be the reason behind the higher demand of Polo mint.
This is the result for shifting of demand curve toward right (Stiglitz and Rosengard, 2015). For
example, Polo mint is generally preferred by the students or young generation and with the rise
of young population, demand of Polo mint can increase (Baisa, 2017). In a Nutshell
Demands for the Polo mint cannot be considered as constant over time and that is the reason
behind the shifting of demand curve rapidly toward right and left (Romer, 2016).
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Moreover, these are the five major factors, which can be the reason for shift of demand curve
toward left or right.
2. Theoretical factors and the reason to shift supply curve
The supply curve shows that how consumers are willing to purchase Polo mint at the given price.
Although, this cannot be considered as constant over time and during the change in supply,
supply curve shifts toward right or left (Diamond, 2017). As an outcome, supply curve shifts
constantly right or left and based on the direction of shift, it equals an increase and decrease in
demand of Polo mint. There are many theoretical factors, which can influence the supply curve. Input Prices
Nestle use many types of inputs to produce the Polo mint and during the increment of price for
those inputs, Nestle face very high costs for manufacture (Acemoglu and Restrepo, 2018). This
can be the reason behind the decrease of profit and reduction of supply. In this case, supply curve
can shift toward left. Number of Sellers
In supply, number of sellers play a major role and has an impact on supply. Supple can be
increased if many companies are entered in market. In this case, supply curve shifts toward right
(Venables, 2017). Moreover, if Nestle exit market then the supply decrease and that shifts the
supply curve toward left. Technology
Utilization of the updated technology in the procedure of production increases the productivity
and that makes the production of products more profitable. As stated by Cohen et al. (2016), this
shifts the supply curve toward right and that means supply is increased. Use of technology can be
considered as the effective process to maximize in supply. The cause of it is new technology is
adopted and this increases the productivity. Natural and Social Factors
There are many social and natural factors, which can affect the supply. For example, natural
factors, which affect the supply, are natural disasters, diseases, pestilence, and extreme weather
condition (Auclert and Rognlie, 2018). If these factors can be the reason of supply to decrease
then supply, curve shifts toward left and if increase then shifts toward right. Expectations
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Expectation of seller for future plays a major role on the supply. If consumers expect that cost of
Polo mint can be increased in future then few of output can back. This can reduce the present
supply. In a Nutshell
Supply for the Polo mint cannot be considered as constant over time and that is the reason behind
the shifting of supply curve rapidly toward right and left.
Moreover, these are the six major factors, which can be the reason for shift of demand curve
toward left or right.
Figure 3: Comparison between Demand curves and Supply curves
(Source: Caballero et al., 2016)
Following graph has shown the shift in demand and supply. Moreover, few factors shift the
demand and supply curve toward right and left.
Shift in Demand Curve
 Price of the complementary goods
 Price of the substitute goods (Auclert and Rognlie, 2018)
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 Income
 Preference and Tastes
 Population
Shift in Supply Curve
 Prices of factors for production
 Prices of the other goods
 State of the technology (Fang et al., 2016)
 Policy of taxation
 Expectation of change in the price in future
 Organizational goals of the Nestle
Moreover, the graph has developed by based on these factors.
Concept of Equilibrium by using the supply and demand diagram
Equilibrium can be considered as the state in where the competing influences are balanced.
There are no incentives to diverge from the present state.
Figure 4: Equilibrium
(Source: Caballero et al., 2016)
As opined by Bartoli et al. (2016), equilibrium price along with quantity depend on the position
of the curves of supply and demands. Economic equilibrium can be considered as the condition
or state in which the economic forces can be made balance between them. Due to the effective of
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it, this can be found that variable of economic is remain unchanged from their equilibrium values
in absence of the external influences. As opined by Bartoli et al. (2016), economic equilibrium
can be defined as a point in which supply and demands of one product become equal.
Impact upon price due to the change of demand or supply using academic theories
Rise and fall of demand and supply are very common until, the Polo mint is reached in an
equilibrium price. With the help of academic theories, the impact on price for the changing of
supply and demand is emphasized in this part of the assessment. There is one of the inverse
relationships between the prices and supply if the demand can be considered as unchanged.
Moreover, price can be decreased to the price of lower equilibrium along with the higher
equilibrium quantity (Auclert and Rognlie, 2018). If supply of products is decreased then it can
be found that demand will remain same. The similar contrary relationship holds for demand of
Polo mint. Although, demand is increased and the supply will remain same, higher demand
directs toward a high equilibrium price.
 Price Elasticity
Increment of price for Polo mint can be the result of decreasing demand while the increasing
demand lead the company towards the increased supply (Basu and Bundick, 2017). Although,
the supply of Polo mint demand variously and demand can be less sensitive to prices than the
others can. According to the economists, this sensitivity can be described as the demand of price
elasticity. Public Perception
If information of customer regarding the available supply is skewed then the resulting demand
can be affected as well. For example, Public suddenly became awarded regarding the availability
of future oil. Fettered Markets
As opined by Bartoli et al. (2016), demand and supply cannot affect the market if there is the
existence of monopoly. For example, the government of United State has passed the laws to
protect the monopoly system. However, still there are the examples, which show the process in
which monopoly can cancel out the principles of supple and demands.
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Reasons behind the change in Demand and Supply
Demand can be considered as the amount of few product one consumer is willing along with
capable to buy at every price. This can be recommended minimum two factors in addition toward
the prices, which affect the demand (Auclert and Rognlie, 2018). Willingness to buy suggests a
desire and according to economist, this is based on the preferences and tastes. Capability to buy
suggests that revenue can be considered as very significant. Rich consumers are capable to afford
high quality transportation and house. On the other hand, poor consumers cannot afford that kind
of things, as their revenue is comparatively less. In this regard, prices can affect the demand also.
As mentioned above, factor that can change the demand are income, tastes, preferences and
advertisement expenditure.
Change in supply can be considered as one of the economic term, which describes the process of
suppliers to alter the production or output. In this regard, this can be found that technology plays
a major role (Basu and Bundick, 2017). Moreover, in current time, utilization of technology is
very common to increase the productivity and it is more effective and very few expensive
process of production. Moreover, few factors that can change supply are such as prices of factors
for production, Prices of the other goods, State of the technology, Policy of taxation, Expectation
of change in the price in future, Organizational goals of the company.
Conclusion
From the above discussion, it can be concluded that there are a positive relationship among
demand, supply, and price. Two types of related good are there, which shift the demand curve in
the left direction. Those types are such as complements and substitutes. It can be found that if
price of Polo mint is reducing then this can decrease the demand of another high price product.
In this regard, Nestle need to prioritize this fact and they have to set the price of Polo mint
considering other this kind of product price. This can be recommended that Nestle need to
improve their technology and make an affordable price for Polo mint, as this is a preferable thing
for many consumers most importantly for the young consumers. As mentioned in above,
expectation of seller for future plays a very vital role on the supply. If consumers expect that cost
of Polo mint can be increased in future then few of output can back.
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Reference List
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Bureau of Economic Research.
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pp.53-78.
Bartoli, A., Cavicchioli, D., Kremmydas, D., Rozakis, S. and Olper, A., 2016. The impact of
different energy policy options on feedstock price and land demand for maize silage: The case of
biogas in Lombardy. Energy Policy, 96, pp.351-363.
Basu, S. and Bundick, B., 2017. Uncertainty shocks in a model of effective
demand. Econometrica, 85(3), pp.937-958.
Baumeister, C.J. and Hamilton, J.D., 2017. Structural interpretation of vector autoregressions
with incomplete identification: Revisiting the role of oil supply and demand shocks (No.
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Caballero, R.J., Farhi, E. and Gourinchas, P.O., 2016. Safe asset scarcity and aggregate
demand. American Economic Review, 106(5), pp.513-18.
Chow, G.C. and Niu, L., 2015. Housing Prices in Urban C hina as Determined by Demand and
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Cohen, P., Hahn, R., Hall, J., Levitt, S. and Metcalfe, R., 2016. Using big data to estimate
consumer surplus: The case of uber (No. w22627). National Bureau of Economic Research.
Diamond, R., 2017. Housing supply elasticity and rent extraction by state and local
governments. American Economic Journal: Economic Policy, 9(1), pp.74-111.
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