BM533 Contemporary Economic Analysis Assignment (GC013061)

Contents

1.0 Introduction.

2.0 Law of Demand, movement along the same demand curve, and changes in demand curve with its factors.

Law of Demand.

Movement along the same demand curve.

Changes in demand curve with its factors.

2.1 Law of Supply, movement along the same supply curve, and changes in supply curve with its factors.

Law of Supply.

Movement along the same supply curve.

Changes in supply curve with its factors.

3.0 Contrast and compare emerging theories and models in 21st-century contemporary economics with those of the 20th century relate both of these to modern business practices.

4.0 Conclusion.

5.0 References.

1.0 Introduction

Microeconomics is a branch of the economy. Microeconomics can be defined as the subject that deals with the behavior of the individual or any firm to make decisions and allocate the resources (Whitehead, 2014). There are so many topics under microeconomics. From those, some topics are discussed in this report. Demand and Supply are the two important topics of the economy. These things are largely related to the economic function of any company. The relation of demand and supply with the economics are described with the help of some graph in this report and some important factors are also discussed with these graphs. Economics has so many theories for many years. Those theories and models are described in this report. Sainsbury is one of the largest retail companies in the UK. The company is chosen for this report and their approaches to the economic field are also described.

2.0 Law of Demand, movement along the same demand curve, and changes in demand curve with its factors.

Law of Demand

Mankiw (2015), said that demand can be defined as a fixed rate, different quantities of a product which people have the desire to buy. It depends on the taste of a people. It is also important to have the ability to buy the product.

According to Diblee (2018), the law of demand states that the price and quantity of a good that is demanded are inversely proportional to each other when other factors are the same. The demand for a product among the people will decrease automatically when there is an increment in the price of that particular product. The opposite incident is also true. So, it means that with the change of price, the choice of the people changes. It happens because people cannot cross their limit in spending money when the cost for the product is high. Sainsbury knows about the demand for their products and they try to fix their price rate at a limit form where customers can buy. The Law of demand creates some other factors. The demand of a product-related to some other things which are also important to understand the law of demand. People cannot buy their demanded product at the exact amount with the increasing of the prices. So, a substation is necessary. They have to buy other products in the replace of that product to meet their demand. On the other hand, when the price of the product decreases, people can buy more products by spending the same amount of money. That will help to increase the income state of the people. When this happens, people can spend less money to fulfill their demand and some money remains. Then people can buy some more products or another product with that remaining money. All of these things are related to the law of demand.

Movement along the same demand curve

The demand curve will show us how the price and quantity of a product of Sainsbury are related to each other. A demand curve will be shown below.

Figure: Moving along the same demand curve   Source: Economics Discussion (2017)

From the above graph, the movement of the demand curve can be expressed. The X-axis represents the demanded quantity of the product. The Y-axis represents the price of the product. There is a movement in the demand curve when the increment in the price happens. When price increases from P₂ to P₁, quantity decreases from Q2 to Q1. Then, there is another movement in the demand curve when price increases from P₁ to P₀, quantity decreases from Q₁ to Q₀. So, in both conditions, movement can be shown in the demand curve but there is no shipment in the curve for the changing in the curve. Points of the curve are just moved from one point to another point of the curve. Movement along the demand curve happens only when the other factors related to the curve remain unchanged and only the price will change. A, B, C, D points are expressed demand points in the above curve. These points move toward the up and downside of the curve with changing of price as well as quantity of the product. Sainsbury controls their price according to the demand of people and makes a stable demanding situation. So, the curve shows that with the other factors remain unchanged, there is movement along the curve by changing the price of the product. (Economic Help, 2017)………………………

Full Documents Click Download Button

Free – Download Checkout Added to cart