Analysis of UK Food Market: Supply, Demand, and Government Policies

This report provides a comprehensive analysis of the UK food market, focusing on the interplay of supply and demand dynamics. It examines various supply curve possibilities, including movements and shifts, and evaluates the factors influencing the demand curve. The analysis includes the identification of equilibrium price and quantity, along with explanations of shortage and surplus scenarios. Furthermore, the report assesses the impact of the COVID-19 pandemic on the food supply chain, considering factors like Brexit and disruptions in import/export services. It also evaluates the programs initiated by the UK government to address the challenges posed by the pandemic, offering insights into their effectiveness in maintaining food security and market stability. The report concludes with a synthesis of the findings and their implications for the future of the UK food market.

Economics for business

EXECUTIVE SUMMARY
This report is a summarised document that is related with the demand and supply aspect of
the UK and various factors that impacted the overall performance of it in the market.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
TASK 1............................................................................................................................................1
1. Detailed examination of the various supply curve possibilities that can occur in the market
of the UK.....................................................................................................................................1
2. Examination and evaluation of various aspects of demand curve and its related factors........4
3. Identification and analysis of the equilibrium price and quantity at a given level of time
period...........................................................................................................................................6
4. Explanation of the different concepts of shortage and surplus................................................7
TASK 2............................................................................................................................................8
Evaluation and analysis of the programs that the government of the UK initiated so as to
overcome the challenges that are posed by the COVID-19 pandemic........................................8
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Economics is one of the most important as well as crucial aspect since it is related with the
aspect of human behaviour that includes the factors of allocation of the available resources in
such a manner so that it can lead to the maximisation of the volume of the profit of the producer,
maximisation of the level of satisfaction of the customers, and maximisation of the welfare of the
society so that it can lead to the overall growth and development in the long run (Babic-Hodovic,
Arslanagic-Kalajdzic and Imsirpasic, 2017). This report includes an elaborated discussion of
various aspects of supply and demand and their possible impacts on the market of the UK in the
long term scenario. Apart from that the report also covers a detailed analysis and evaluation of
the policies that are adopted by the government of the UK so as to overcome all the challenges
that are faced by them in the industry and also to overcome the ill effects of the food market’s
negative impact.
MAIN BODY
TASK 1
1. Detailed examination of the various supply curve possibilities that can occur in the market of
the UK
The different concepts of supply are discussed below in a detailed manner-
Movement on supply curve- It is a situation when other things being equal, the quantity
supplied either extends or contracts with the possible increase and decrease in the prices of the
commodity respectively. In other words it can be said that movement in the supply curve is a
situation in which there is an upward and downward movement in the curve of supply takes
place because of the changes in the price of the commodity while keeping all the other factors
constant. Below is a diagrammatic representation done of the supply curve of the food supply
chain because of the situation of the COVID-

In the above diagram the price or it can be said as the rate of the product of the particular
food is shown on the (Y-axis) while the supplied quantity is shown on the (X-axis). There is an
upward movement in the supply curve that means that the quantity supplied increased with the
increase in prices whereas the supplied quantity decreases with the decrease in the prices of the
commodity in which all the other factors remains constant and all of these changes can be seen in
the above made graphical representation (Becker, Lee and Nobre, 2018).
Supply curve shift left- It is a situation in which the supply curve shifts left due to a
number of reasons that affects the overall working of the industry and thus it can be seen from
the graphical representation that has been done below-

The outbreak of COVID-19 leads to the overall shut down of all the industries that are
working in the country of not only in the UK but all over the world which subsequently resulted
in the increase in the overall prices of the commodity since the manufacturing costs also
increased and thus resulting in the decrease in the profitability of the company so as a result
quantity supplied also decreases since the producers are not willing to sell the product at lower
prices due to which supply curve shifts leftwards.
Supply curve shift right- The rightward shifting of the supply curve is shown below in a
graphical representation-

The period of COVID-19 resulted in the rightward shifting of the supply curve and the
possible reason for this shift is that due to the pandemic situation the demand of essential
commodities increases and thus quantity supplied also increases at a much lower price level and
thus causing this shift (Chang and Hanson, 2016).
2. Examination and evaluation of various aspects of demand curve and its related factors
There are many different concepts of demand curve that are discussed below in detail-
Movement of demand curve- It is a situation that occurs when other things being equal
the demanded quantity extends and contracts with the respective decrease and increase in the
prices of the commodity. Its elaborated explanation is given below using the proper graphical
presentation-
The effect of COVID-19 can be seen in it as the pandemic resulted in a numebr of job
losses and henc ewhen the prices of the commodities increases the quantity demanded decreases
while the quantity demanded increases with the decrease in the prices in the ccommodity and
thus it resulted in the movemnet along the demnad curve.
Demand curve shift left- The concept of demand curve shifting on the left hand side and
its possible reasons are explained below with the help of a graphical representation-

Due to COVID-19 the quantity demanded decreased at the same price level since people
only lean towards the buying of the necessary goods and services and thus it resulted in the
decrease in the demanded quantity at the same level of price and thus resulting in the leftward
shifting of the demand curve (Ciaian, Rajcaniova and Kancs, 2016).
Demand curve shift right- The concept of demand curve being shifting on the right
hand side is explained below with the help of a graph-
Due to the impact of the COVID-19 demand for the food products that are necessary for
consumption increases at a similar price level and thus resulting in the shifting of the

demand curve on the right hand side. Thus it can be said that even at the similar price level
people are willing to purchase more quantities at a given period of time.
3. Identification and analysis of the equilibrium price and quantity at a given level of time period
Equilibrium is mainly a state of balance and thus it can be said that it is a state of position
of rest in which two forces becomes equal so that there is no tendency to change. The
equilibrium is a position in which demand and supply becomes equal at a given period of time
and at a price level and at a specific quantities. With context of the UK equilibrium it a position
in which food chain of the market in which two forces that are of demand and supply becomes
equal at a given period of time and thus the state at which the two forces that are of demand and
supply cuts each other it is said to be equilibrium.
The demand for a commodity contracts because of the replacement and income effect of a
product which is related with the increase in the price as well as quantity supplied that is
supplied by the producer at a given level of time during a period of various intervals. Since it can
be said that demand will be maximum when the prices of a commodity is at its minimum level
since the consumer can maximise its level of satisfaction within a given level of income. Where
supply contracts due to decrease in prices for a commodity since the producer is not willing to
sell his products at a lower level of profitability hence resulting in the contraction of the quantity
supplied. Whereas the quantity supplied will be maximum when the price of a commodity is also
at its maximum resulting in the increase in the volume of the profitability of the firm (DAO and
NGUYEN, 2020).

Thus in context of COVID-19 it can be said that the suppliers become less willing to sell
their products in the market since the prices are at their lowest and the customers are willing to
purchase more and more products so that they can buy a much more volume of the product
within a specific level of income as compared to the previous time. thus because of the two
forces the equilibrium strikes at a place below the prices currently prevailing in the market by
above at the prices that are prevailing in the past and it can be seen from the above diagrammatic
representation that has been done.
4. Explanation of the different concepts of shortage and surplus
The concept of shortage with respect to the food chain industry of the UK can be
understood as when the pandemic that is COVID-19 struck the whole world the demand for food
and essential natured products drastically jumped many folds and thus resulting in the shortage
of food and related goods and services. Thus it can be determined as the shortage in the industry
off food chain.
Surplus is a situation in which the quantity supplied is much more than the quantity
demanded and hence resulting in a situation of excess supply in the market which can further
lead to the decrease in prices of the commodity since people are not purchasing the products and
hence suppliers tends to lower down the prices of the products and thus it is a situation that is
regarded as excess supply (Hommes and LeBaron, 2018). With context of the UK food chain the
excess supply is a situation that came in the pandemic that is COVID-19 since individuals are not
willing to purchase luxury goods that are of high value in the market since the basis requirement
is for survival and thus it created a market in which there is an excess supply of these products
and services and thus making their prices drop in the subsequent industry. Both the aspects that
are explained above are better discussed in the graphical presentation that has been done below
in a well systematic and sequential manner-

TASK 2
Evaluation and analysis of the programs that the government of the UK initiated so as to
overcome the challenges that are posed by the COVID-19 pandemic
The COVID-19 pandemic tested the resilience and the patience of the whole world and
also it tested the capability and capacity of the nations so as to ensure that they are sufficient
enough to provide basic necessities of life to each and every person that is living in their country.
The most affected area was the food supply chain since it is a one that is included in the basic
necessities that a person requires so as to survive in the market (Jukan and Softic, 2016). There
are various aspects that possess a lot of value with respect to this and thus all of them are
explained in a well detailed manner below-
 The main reason for the effect was the Brexit law that was in consideration just before the
pandemic and was passed in the year 2020 which resulted in the exit of the United
Kingdom from the European Unions and thus resulted in the increase in the prices of the
food products since it has to be imported and various taxes are added in it which made it
very costlier.
 The other things is that due to the pandemic the air services was disrupted and hence the
export and the import of various kinds of essential products got delayed which resulted in