Demand and supply

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Introduction

         The market has two sides: buyers and sellers. In Economics, the market relations between prospective sellers and buyers of a good are known as Demand and Supply. The phrase "supply and demand" was first used by James Denham-Steuart in his book named Inquiry in to the Political Economy which was published in 1767.(Humphrey, Thomas M. (1992).Demand is a quantity demanded of a good or service that the consumers plan and are able to buy in a given period of time at a particular price. Supply is the quantity supplied of a good or service is the amount of the producers plan to sell during a given time at a particular price. (Parkin et al. 2008).

         This report is consists of the four parts: the first part is introduction, second part is demand analysis, third part is supply analysis and the final part is conclusion, with references and bibliography at the end of the report. In the second and the third part of this report there will be explanations of factors that will affect the Demand and Supply for a given number of products, based on our analysis of the situation on the market of each given products. After description of the factors affecting demand or supply, each product is graphed to show future prediction in the market.

Demand & Supply Analysis

Demand

         "The laws of demand states, other things remaining the same, the higher the price of the good, the lower are the quantity demanded; and the lower the price of a good, the higher is the quantity is demanded. " (Parkin 2008. p.64). A Demand is build as a downward sloping of curve, taking in to the assumption that none of the determinants of the demand, other than price changes. There are six determinants of demand: price of the products, price of other products, income, population, preferences and future price expectations. Changes in the determinants of the demand other than price cause and the whole movement of the demand curve. Below demand with factors for different products are analyzed and graphs is provided. (Sloman 2006)

Convenience foods (sold in food shops and supermarkets).

         Demand for convenience food in United Kingdom will certainly grow in the future. Factors that will be affecting the demand are preferences of the population that will be in favor of such kind product in the next several years, as United Kingdom is country, that is most attached to fast food, closely followed by the United States according to the BBC News Channel. Working population prefer to buy convenience foods due to their good price, convenience, that is takes less time to cook , easy to cook and consumer desire to reduce waste of food. There is plenty of convenience food available in the United Kingdom market such as ready meals, pizza, frozen bakery, meat, poultry, and fish.

         For example, we will see on frozen market in the United Kingdom, it was valued at €3.84 billion in 2008 and increased by almost 7% in value terms during the 52 weeks ending January 2009. Frozen pizza grew by 7%, sales of frozen fish increased by 16% over the past 18 months.

         There are several retailers of the frozen food in the United Kingdom. They are Lidl, Aldi and Iceland, Sainsbury, Asda, Morrison and others. Lidl, Aldi and Iceland has a expansion in frozen food sales of more than 14% for the 52 week period ending February 2009, Sainsbury's increased by 12.4%, Asda and Morrison's grew by 9.8% and 7.2% respectively. It is predicted that the frozen food market will value €4.1 billion in 2011 and anticipated increase over the period include frozen ready meals by 1.6%, frozen bakery products by 1.5% and frozen pizza by 1.3%. (Hussey M. 2009).

Products purchased on the Internet.

         Demand of the Products purchased on the Internet is very high and will continue to grow in the future, as in our day's internet sales boom opens the huge prospects of online sales and growth of the electronic commerce. The main factor of shift in demand is increase in population, as more and more people having access to internet every day and do not have much time to go shopping. Online purchasing has a lot of choice; this is very convenient and available at any time. It is estimated, that by 2011, an estimated 75% of United Kingdom households will have Internet access. (Short Survey of Published Material on Key UK Trend). Online marketing experts forecasts that online sales will continue to get higher in the United Kingdom market overall over the next years and Britain's online retail sector will triple in value by 2011, as more and more people are shopping online creating the opportunity for success in online commerce: (Financial news-Credit cards News-Online retail to triple by 2011)

         Moreover, by 2010, 95% of the United Kingdom population may be conducting retailing of goods by means of the internet, making the country the second-biggest internet spender in Europe.

Film and cameras

         The market for the digital camera is in maturity stage; therefore the demand for digital cameras will fall gradually in the coming years. The main factor of decreasing the demand is change in people preferences. Also decrease in demand is due to the fall in demand for compact cameras to higher prices, and the effects of the global recession .Almost 75% of United Kingdom households own a compact camera and people do not want to upgrade to newer models during a recession. Film sales have decreased by 75% since the maximum film sales in 1999. The fall down has been between 20-30% every year over the past four years. (Film Drop-off sites fade against digital cameras - New York Times). In May 2009, there were sold 433,900 compact cameras that are 73,400 fewer than in May 2008, which is led to decrease in compact camera sales revenue by 11%. Shortening of the digital camera, which is mostly is controlled by Japan's canon and Nikon and Sony market with over 80% will start in the year 2011 due to the satiation of market in all regions. (Cheesman C.2009)

Video (VHS) rented from retail outlets

         The demand of rented video from retail outlets is decreasing and will continue to decrease in future. There main factors affecting the decrease in demand is the change in preference of people, due to the invention of online multimedia, which allows films and television programmes to be downloaded over high-speed internet connections. Also decrease in demand in VHS is due to the availability of free pirated videos and movies inexpensive original videos in the internet.

         The number of the video rental transactions fell by the 19 million from the 2007, and the value of the rental market fell to 219 million pounds in 2008 form a peak of 476 million pounds in 2002.

Pay-per-view television programming

         "Pay per view is usually defined as any TV entertainment that is purchased to be viewed once or for a set period of time. The most popular forms of pay per view programming are usually purchased and shown through cable TV or Satellite TV services. These programs include live sporting events such as boxing matches, football games, the Olympics, baseball games or special wrestling matches, first run movies on cable or satellite services popular TV shows, new and old movies or sporting events that have taken place already."

         Demand for pay-per-view television programming is slowly decreasing. The main factor of shift in demand is change in people preferences and decrease in population, which means decrease in the number of customers. Reason that leads to shift in demand is because of the presence on the market major television operators, which provide digital multi-channel services, which include telephone, broadband and broadcasting, while pay per view satellite broadcasters is unable to provide such kind of services to their customers. The other problem of pay-per-view television programming is that customers have to watch the programs in accordance with pay-per-view television programming providers' schedule, viewers cannot end or reverse the movie at what time they want, they have to pay again if they want to watch the movie again, and also there are not enough channels. (What is per view?)

Supply

         "The law of supply states, other things remaining the same, the higher and the price of a good, the greater is the quantity supplied; and the lower the price of the good, the smaller is the quantity supplied". (Parkin 2008. p.64). A supply is build as an upward sloping of curve, taking in to the assumption that none of the determinants of the supply other than price changes. There are six determinants of supply: price of the products, price of other products, prices of factors of production, technology, number of producers, future price expectation. Changes in the determinants of the demand other than price cause and the whole movement of the supply curve. Below supply analysis for different products are presented and the graphs are provided. (Sloman 2006)

Crude oil

         Crude oil supply is decreasing and will be decrease in the following years. In a long run supply of crude oil will gradually slow down, since the resources are limited. The average size of new discoveries was 527 Mb in the period 1960 to 1970.This amount has declined to 20 Mb per over the period 2000 to 2005.

The main factor of decrease in supply is decrease in production, which means increase in cost of production. "The world oil production has peaked in 2006. Production will start to decline at a rate of several percent per year by 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame". (Crude Oil-The Supply Outlook)

         In every oil country firstly big fields are developed and only after the smaller one are developed. As soon as the first big fields of a region have moved their production peak, an increasing number of new and generally smaller fields have to be developed in order to reimburse the decline of the production. From there on, it becomes increasingly hard to continue the rate of the production growth. However, these smaller fields reach their peak much faster and then contribute to the overall production decrease.

The forecasts for the global oil supply are: In 2006: 81 Mb/d, 2020: 58 Mb/d - 2030: 39 Mb/d. A regional analysis shows that, apart from Africa, all other regions show decreasing productions by 2020 compared to 2005. By 2030, all regions show significant decrease compared to 2005. (Crude Oil-The Supply Outlook)

Hotel rooms

         According to World Travel and Tourism Council, Turkey ranked 15th place out of 181 countries in the world regarding its tourism and travel industry (T & T) revenue, in 2009. Hotel market in Turkey has been growing gradually, in terms of both demand and supply. The main factor of growing supply is increase in number of producers, who build the hotels as over the past ten years, number of rooms increased by 67% and achieved to 250,000 units in 2,500 places. By the year 2015, it is predicted, that the total number of places will get to approximately 3,500 with 370,000 rooms. Turkey has become more attractive for new developments, especially over the last couple of years. International hotel chains announced their expansion strategy both in major metropolitan cities and medium - size Anatolian cities of Turkey. Global credit crunch may limit new supply expected to be delivered in the market within the following years. Taking the optimistic picture, hotel market is forecasted to get better by the end of the year. Number of arrivals is expected to increase in the next years regarding the country's accession into the EU, attention to sports, potential meetings, incentives, conferences and exhibitions both international and national level, especially in major metropolitan cities.( Turkey Hotel Market Overview)

Fast food outlets in emerging markets

         Supply for convenience food is expected to grow in the future. It will be affected by the increase in demand, because the usage of fast food is growing in the emerging markets. These countries are: China, India and parts of Europe and Africa. The main factor, that leads to shift in supply, is increasing number of producers. In spite of economic recession, fast food outlets (Subway, McDonalds, KFC and Domino's Pizza) launched new stores in the emerging markets during last times. Sandwich Company Subway, having approximately 1,400 outlets in the United Kingdom and United States, wants to invest 60 million pounds in business growth by 2010. According to analysis of PricewaterhouseCoopers, fast food is proving to be good during the recession in emerging markets, as the fast-food sector moves from a franchisee, expansion into emerging markets has lower risk in financial expressions. Consumer leader at PricewaterhouseCoopers, said: "Well before the current global economic malaise, multinationals had been shifting strategy to concentrate on emerging markets because that's where the growth was coming from. The outlook for the developed world over the next two years is still uncertain and many retailers and consumer-products companies are expected to put renewed emphasis on emerging markets as an engine of future expansion." (Fast food sector to expand in emerging markets in 2009).

Credit cards issued by financial institutions

         The amount of credit car cards issued by financial institutions is slightly decreasing. Back in 1966, Barclays had introduced the credit card to the United Kingdom; by this it launched a multi-billion pound industry. The credit card became a consistent provider of growth and profits to United Kingdom banks and other card issuers. No other country in Europe achieved anything on a comparable scale. After years of uninterrupted growth, credit card issuers found themselves struggling with declining volumes, rising bad debts and a host of regulatory pressures. During 2006, the overall size of the market actually shrank. Spending and borrowing on credit cards fell in nominal as well as real terms. In addition to the unaccustomed experience of market contraction, the industry faced further specific pressures on its profitability. Important revenue streams such as interchange income, late payment fees and payment protection insurance commissions are subject to extensive regulatory scrutiny. Further, deteriorating loan quality has forced issuers to increase their bad debt provisions. Moreover it is predicted a further drop of 1.5% in 2010, and a 6.4% fall in the credit card market in 2009. (Datamonitor Research Store-UK Plastic cards: Outlook to 2010)

Laptop computers

         Demand for laptop computers is increasing, and it's a trend that's likely to continue to grow going forward. Because of the increasing demand, supply is also increasing. The main factor of shift in supply is increase in the number of producers, as every year more and more producers are appears. Also the demand for desktop computers is decreasing, price for them is also decreasing, as it is substitute of the laptop computers, supply for laptop computers is increasing. The result of this is that portable computers will represent more than 50 percent of all client personal computers worldwide in 2011. The Laptop market is grows very fast, because of change in work life of consumers. As there is a need for every time access to information is become strong, the sales of Laptops are also increasing. Other factors that are accountable for increase in sales figure are reduction in prices and affordability. Laptops are now sold at almost half the price at which they were sold some years ago. Laptops prices have the same price as the desktop computer prices. Final significant factor is duty free import of Laptops as a personal baggage that has helped a lot in increasing the access level of the product among the buyers. Knowledge about laptops has also grown up over the years. It is predicted, that the market for notebooks will grow at a compound annual growth rate of 16.1 percent from 2006 until 2011, compared to a miserly 3.8 percent compound annual growth rate for desktop computers. (Laptops drive PC market-Channel Register)

Conclusion

         To sum up, in these report there were presented explanations of factors that will be affecting the Demand and Supply for a given number of products, answered the question set, based our analysis of the situation on the market of each given products. Provided insightful analysis of issues involved organizing it with supporting evidence. After description of the factors affecting demand or supply, each product is graphed to show future prediction in the market. Attached a reference list and a bibliography of the books used in the assignment.

References:

  • Parkin, Powell, Matthews (2008) Economics, Pearson Education Limited, 7th Edition, Pp 59-64
  • Sloman J. (2006) Economics, Pearson Education Limited, 6th Edition, Pp 36-41
  • Humphrey, Thomas M. (1992). "Marshallian Cross Diagrams and Their Uses before Alfred Marshall: The Origins of Supply and Demand Geometry, Federal Reserve Bank of Richmond Economic Review, Volume 78, No. 2, Pp 3-23.

Web:

  1. BBC News. Health. UK and US 'keenest on fast food' (2008) UK and US 'keenest on fast food'[online], (Accessed on 11/11/2009) Verified on: http://news.bbc.co.uk
  2. Hussey M., (2009), UK frozen food market returns to growth [online] (Assessed on : 12/ 11/2009),Verified on: http://www.bordbia.ie/industryservices/alerts/pages/UKfrozenfoodmarketreturnstogrowth.aspx?year=2009&wk=14
  3. Financial news-Credit cards News-Online retail to triple by 2011, (2007). Online retail to triple by 2011 [online]. (Accessed on 15/10/09). Verified on: www.financialadvice.co.uk/news/2/creditcards/5696/Online-retail-to triple-by-2011.html
  4. Short Survey of Published Material on Key UK Trends :( June 2001), (Accessed 10/11/2009). Verified on: http://www.cabinetoffice.gov.uk/media/cabinetoffice/strategy/assets/key.pdf,
  5. Film Drop-off sites fade against digital cameras -New York Times (2007) Film Drop-off sites fade against digital cameras [online] (Accessed on 20/11/2009), Verified on: http://www.nytimes.com/2007/10/09/business/09film.html?_r=2&ref=business
  6. Cheesman C.(2009), Compact camera sales drop 14.5%, (Accessed on: 21/11/2009), Verified on: http://www.amateurphotographer.co.uk/news/_Compact_camera_sales_drop_145__DSLR_sales_continue_to_ride_out_recession_news_285391.html
  7. Ch14: The UK firm market as a whole, Ch14: The UK firm market as a whole, [online], (Accessed 22/11/2009), verified on: http://sy09.ukfilmcouncil.ru.com/?id/=41271;
  8. What is per view? What is per view?[online] (Accessed 22/11/ 2009) Verified on: www.tech-faq.com/pay-per-view.shtml
  9. Crude Oil-The Supply Outlook, (2007), Crude Oil-The Supply Outlook, Report to Energy group watch group, EWG-Series No3/2007.[online], (Accessed 8 Nov 2009), Verified on: http://postcarboncities.net/files/EWG_Oilreport_10-2007.pdf.
  10. Turkey Hotel Market Overview, (2009) [online], (Accessed on 11/11/2009) Verified on http://www.europaproperty.com/pdf/Turkey12009.pdf
  11. Fast food sector to expand in emerging markets in 2009?(2009), Fast food sector to expand in emerging markets in 2009, [online], (Accessed on 11/11/2009) Verified on http://www.infogrok.com/index.php/prediction-consumer/fast-food-sector-to-expand-in-emerging-markets-in-2009.html
  12. Datamonitor Research Store-UK Plastic cards: Outlook to 2010,(2009), UK Plastic cards: Outlook to 2010, [online], (Accessed on 11/11/2009) Verified on http://www.datamonitor.com/store/Product/uk_plastic_cars_outlook_to_2010)
  13. Laptops drive PC market-Channel Register,(2007), Laptops drive PC market [online], (Accessed on 11/11/2009) Verified on : www.channelregister.co.uk/pc_builder
  14. Gartner forecasts PC sales to rise this year, Gartner forecasts PC sales to rise this year (2009) , market [online], (Accessed on 11/11/2009) Verified on : http://www.v3.co.uk/v3/news/2253809/gartner-forecasts-pc-sales

Bibliography:

  1. Parkin, Powell, Matthews (2008) Economics, Pearson Education Limited, 7th Edition, Pp 59-64
  2. Sloman J. (2006) Economics, Pearson Education Limited, 6th Edition, Pp 36-41
  3. Humphrey, Thomas M. (1992). "Marshallian Cross Diagrams and Their Uses before Alfred Marshall: The Origins of Supply and Demand Geometry, Federal Reserve Bank of Richmond Economic Review, Volume 78, No. 2, Pp 3-23.
  4. BBC News. Health. UK and US 'keenest on fast food' (2008) UK and US 'keenest on fast food'[online], (Accessed on 11/11/2009) Verified on: http://news.bbc.co.uk
  5. Hussey M., (2009), UK frozen food market returns to growth [online] (Assessed on : 12/ 11/2009),Verified on: http://www.bordbia.ie/industryservices/alerts/pages/UKfrozenfoodmarketreturnstogrowth.aspx?year=2009&wk=14
  6. Financial news-Credit cards News-Online retail to triple by 2011, (2007). Online retail to triple by 2011 [online]. (Accessed on 15/10/09). Verified on: www.financialadvice.co.uk/news/2/creditcards/5696/Online-retail-to triple-by-2011.html
  7. Short Survey of Published Material on Key UK Trends :( June 2001), (Accessed 10/11/2009). Verified on: http://www.cabinetoffice.gov.uk/media/cabinetoffice/strategy/assets/key.pdf,
  8. Film Drop-off sites fade against digital cameras -New York Times (2007) Film Drop-off sites fade against digital cameras [online] (Accessed on 20/11/2009), Verified on: http://www.nytimes.com/2007/10/09/business/09film.html?_r=2&ref=business
  9. Cheesman C.(2009), Compact camera sales drop 14.5%, (Accessed on: 21/11/2009), Verified on: http://www.amateurphotographer.co.uk/news/_Compact_camera_sales_drop_145__DSLR_sales_continue_to_ride_out_recession_news_285391.html
  10. Ch14: The UK firm market as a whole, Ch14: The UK firm market as a whole, [online], (Accessed 22/11/2009), verified on: http://sy09.ukfilmcouncil.ru.com/?id/=41271;
  11. What is per view? What is per view?[online] (Accessed 22/11/ 2009) Verified on: www.tech-faq.com/pay-per-view.shtml
  12. Crude Oil-The Supply Outlook, (2007), Crude Oil-The Supply Outlook, Report to Energy group watch group, EWG-Series No3/2007.[online], (Accessed 8 Nov 2009), Verified on: http://postcarboncities.net/files/EWG_Oilreport_10-2007.pdf.
  13. Turkey Hotel Market Overview, (2009) [online], (Accessed on 11/11/2009) Verified on http://www.europaproperty.com/pdf/Turkey12009.pdf
  14. Fast food sector to expand in emerging markets in 2009?(2009), Fast food sector to expand in emerging markets in 2009, [online], (Accessed on 11/11/2009) Verified on http://www.infogrok.com/index.php/prediction-consumer/fast-food-sector-to-expand-in-emerging-markets-in-2009.html
  15. Datamonitor Research Store-UK Plastic cards: Outlook to 2010,(2009), UK Plastic cards: Outlook to 2010, [online], (Accessed on 11/11/2009) Verified on http://www.datamonitor.com/store/Product/uk_plastic_cars_outlook_to_2010)
  16. Laptops drive PC market-Channel Register,(2007), Laptops drive PC market [online], (Accessed on 11/11/2009) Verified on: www.channelregister.co.uk/pc_builder
  17. Gartner forecasts PC sales to rise this year, Gartner forecasts PC sales to rise this year (2009) , market [online], (Accessed on 11/11/2009) Verified on : http://www.v3.co.uk/v3/news/2253809/gartner-forecasts-pc-sales

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.