This document provides an analysis of microeconomic concepts related to Walmart using the laws of supply and demand. It discusses how Walmart applies the law of demand through changing prices in response to consumer demand. It also discusses how the law of supply relates to Walmart by increasing supply when prices increase. The document concludes by comparing 20th century economic theories like Keynesian economics to contemporary economics, noting how theories have evolved with changing business environments.

1. BM533 Contemporary Business Economics
Answer:
Introduction
The economics discipline has gained immense popularity in the context of academic areas,
and policies formulation. In the current liberal, global, and knowledge-based environment,
the insights of economic issues have now become indispensable for all the sections in the
society. Contemporary business economics include the organizational, financial,
environmental related, and market related issues that are faced by the corporations (Tucker
2016). Hence, this report purposes to analyze the microeconomic concepts with reference
to Walmart; and comparison and contrast will be done on the developing theories and the
models in the twenty-first century modern economics with that of the twentieth century.
Discussion
Task 1- Demand and Supply Analysis
Economics is stated as the study of a particular economy or the marketplace’s functions and
the components, such as demand & supply. Microeconomics focuses on the role that
businesses and consumers play in the economy. Its main goal is to understand the
individual units’ behavior to predict the success. In businesses, microeconomic principles
are used to take the decisions relating to the factors. For instance, decisions related to the
productivity, labor, kinds of the goods & services to be offered, pricing, demand & supply,
and economic utility. The microeconomic concepts have been highly used in the retail
industry (Fine 2016). Walmart is the largest retail company that is based in the US. The total
revenue of Walmart was $559 billion in 2020. This company has gone through some major
changes to align with the ongoing market dynamics of supply and demand
(Corporate.walmart.com. 2021).
Law Of Demand
The law of demand continues to be significant concept in economics. This concept help in
describing the opposite relationship between the goods’ price and the quantity demanded
(Conway and Eckersley 2017). The Law of demand states that, given the other factors being
constant, the quantity demanded and the goods & services’ prices are inversely related to

2. each other. It implies that when there is increase in the product’s price, the demand of that
product will fall, as the consumer may start buying less or shift to the substitute product.
The law of demand mainly explains the choice behavior of a consumer when there is any
change in the product or services’ prices. A consumer usually hesitates to spend more for a
product, whose price has been increased because of the fear of loosing the cash available to
him or her (Mazurek, García and Rico 2019). The buyers purchase less quantity of a product
at the higher price because as there is increase in the price of a product, the opportunity
cost of purchasing that product also increases. As an outcome of which, people start
avoiding to purchase a product or a service that pressurize them to sacrifice the product’s
consumption they actually value more. Further, the demand ratio curve depicts the adverse
relationship between the quantity demanded and price; hence, the curve is sloping in the
downward position (Cerreia-Vioglio et al. 2016). For instance, the concept of the law of
demand can be applied in the demand of the products of Walmart. Below is the curve
depicting the demand curve of Walmart’s product:
Figure 1: Demand Curve for Walmart
Figure 2: Shift in Demand Curve for Walmart
The demand for the products of Walmart can be considered as the elastic demand. It implies
that a small proportionate change in the prices of the product will result in increased
demand for the product. It implies that the change in the price of any product of Walmart
will results in purchasing less product by the customers. For instance, when the products’
price changes from $5 to $8, the customers will reduce purchasing the products; and when
prices of the commodity decrease from $8 to $6, the customers will increase purchasing the
product. It is when the factors determining demand remains constant. Further, movement
of the demand curve signify a different aspect in the market (Chu, Huang and Liu 2017). It
indicates changes in quantities demanded and prices from one point to the other on the
curve. In case of Walmart, the change in its products’ prices result in the change in the
quantity demanded. It happens when the other factors affecting the demand of the products
of Walmart continues to be same. A change in the factors help in determining the
commodity’s market demand, and also affect positioning of demand curve (Salerno, 2020).
Law Of Supply
Both law of demand and supply are considered as one of the most basic concepts, as well as
considered as the backbone of the market economy. As per the law of supply, given the
other factors being constant, the supplied quantity and the price of the goods are related
directly to each other. It implies that when there is increase in the price paid by the buyers

3. for the goods, the suppliers increase the total supply of those goods in the market (Ragni
and Baldin 2015). This law shows the behavior of a producer at the time of changes in the
goods & services’ prices. When the product’s price increases, the supply is increased by the
suppliers, so as to earn more profits due to the higher prices. Just as the law of demand, the
law of supply indicates the quantities to be sold at the given price. The difference lies in the
inclination of the demand and supply ratio, as the supply ratio in the law of supply indicates
the upward slope compared to the law of demand that shows the downward slope. It
implies that higher the price, the higher will be the overall supplied quantity. In the
expectations of earning more revenue, producers supply more at the higher price (Kakarot-
Handtke 2014). For instance, the concept of law of supply is applied to the supply of
Walmart’s product to the customers or buyers. Below is the supply curve indicating the
movements of Walmart’s product along the supply curve:
Figure 3: Supply Curve for Walmart
When there is increase in the price of commodity, suppose $1 to $3, the suppliers supply
more to the market; and when the price decreases from $3 to $2, the supply of the goods
will be reduced by the supplier, causing reduction in the supply. This results in the supply
movement along the supply curve. Further, supply curve moves in an upward direction with
the rise in the price, and move downward with the reduction in the product’s price.
Likewise, in case of Walmart, when there is reduction in the price of goods, its suppliers
look for the other clients offering better prices, which results in increasing the goods’ prices
by Walmart to attract the suppliers. Law of supply holds that there includes direct
functional relationship between quantity supplied of the commodity and price, given other
things remaining constant. Some of the factors affecting supply includes products’ price,
availability of the factors of production and their prices, market structure, government
policy, advancement in technology, natural weather conditions, and improvement in
transport (Buechner 2018).
Supply is affected by the number of factors, such as high numbers of suppliers in the market
result in more supply of goods in the market. The supply curve shifts right with the increase
in the supply due to more suppliers, and shifts left with less supply due to less supplier. The
resources’ prices affect the total number of the goods supplied in the market. A reduction in
the price will increase supply resulting in shifting of supply curve towards left, and increase
in the price will decrease supply. Moreover, subsidies and taxes affect the total income
gained by the supplier. For instance, taxes reduce the profit due to increasing cost that
causes less supply by the suppliers; and increase in subsidies encourage more supply and
production, and vice versa (Kakarot-Handtke 2014). Further, technology enhances
efficiency in the production, cost reduction, and increasing cost, which results in increasing
supply, and supply curve shifts in the rightward direction. The change in the expectations of
suppliers regarding the future prices may affect their present supply. In case, Walmart
expect an increase in the prices in future, they start employing more resources in order to
increase their output that increases the supply (Yoshii 2017).

4. Task 2- Compare And Contrast Of Contemporary Economics With The 20th Century
Economics is considered as a science, which studies the way goods and services are
produced and consumed by the societies. The economic subject has undergone through the
overwhelming changes over the years. The theories of economics have influenced the global
finance at various key junctures all through the history as well as is the integral factor in
everyday lives. Nevertheless, the beliefs guiding the economics study have dramatically
changes all through the history. The 20th century has seen profound progress in the
economic thought. It has been related, among the other things, with the evolution of the
economics to a completely disciplinary status that had started to be established late in the
19th century. The classical macroeconomics has ruled the capitalist economics prior to the
introduction of Keynesian economics in the year 1936, who believed in the free market, and
realization of full employment through the demand and supply forces. They believed in the
self-adjusting market mechanisms. Their economic theories have failed to acknowledge the
role of governments because market forces result in the complete employment (Durlauf and
Blume 2016).
The development of the Keynesian economics is the result of The Great Depression of
1930s. This depression has revealed that the market forces could not save the economy. In
the early 20th century, John Maynard Keynes developed the economics theories that are
still used by the Federal Reserve to manage the monetary policies. He styled the classical
economists and he assumed that while their economic theories might be applied to the
goods markets and individual choices, they did not sufficiently explain the economics
operation as a whole. Rather than specific goods markets and the prices or marginal units,
the Keynesian macro-economic presented the overall economy in the terms of large-scale
aggregates, which signified the aggregate-demand, unemployment rate, or the average
price-level inflation for the total goods. The theory of Keynes stated that the governments
are the powerful and the most significant players in the economy, who helps in saving the
economy from recession through implementing the expansionary monetary and fiscal
policy, manipulating the spending of government, taxing, and creating of money for
managing the overall economy (Cooley and Prescott 2021).
Keynes found the spending of government as an approach of increasing the aggregate
demand. Keynesians found that both fiscal and monetary policies to be effective in
managing the aggregate demand levels. It has established itself as a significant economic
theory by 1950. In 1960, there was emergence of monetarism form that advocated allowing
supply of money to increase at the continuous rates without any monetary or fiscal policy
measures to stabilize an economy. Later, in 1970s, the efforts were made to revive classical
belief. Further, proponents of the new classical economics have asserted that if the
economic agents, for instance, businesses and consumers use the rational views related to
the policies of government that they will discourage the likely policy actions by changing
the behaviors. It is because the market forces are not responsive to such kind of influence,

5. the fiscal and monetary policies were not required (Pradella 2014). However, most of the
contemporary theories of economics are based on Keynes’ work and Milton Friedman- free-
market theories suggest that more capital in the system reduces the requirement for the
involvement of the government (Raworth 2017).
In the neoclassical synthesis, different streams of the economic belief have developed, many
times in contrast to one another. The main differences between the neoclassical micro-
economics that suggests free markets as beneficial and efficient, and the Keynesian macro-
economics that beliefs markets as fundamentally susceptible to the tragic failures, has
resulted in the persistent public policy and academic disagreements, with the different
theories dominant at the different periods. The proponents of the new classical economics
developed the concept of rational expectation to develop the real business progression
models. Further, the 21st century have been the time of the economic and technological
progress, in spite of the 2008 global financial crisis. In 21st century service markets,
economics of the industrial period has somewhat become quite less appropriate (Gilpin
2018).
In the contemporary world of the economics, natural and human capital are increasingly
valued, and estimation of the national product, wealth, and the human satisfaction and
gratification are usually assessed on regular basis. The economic notions of the twentieth
century have highly affected the world’s economy, especially one-dimensional and idealized
free market economics, which has resulted into terrible economic recession of the recent
years. Moreover, the fundamental GDP measures overlook the key components of the
wealth and the other activities. Hence, the suitable economics of 21st century have
improved the outdated paradigms. The Keynesian model has been now applied as the
growth theory, and internalization theory has been now applied in explaining MNCs
exploiting superior knowledge overseas rather than allowing the users to the foreign
partnership. The behavioral economics has integrated the insights from the psychological
study into the economic science, especially regarding human judgement and the decision-
making under uncertainty (Deleplace and Nell 2016).
Hence, it can be said that the theories of economic grew out of the requirements of the
societies to account for the future plan, resources, and allocation and exchanges of the
goods & services. Over the period, these fundamental tools of accounting grew into the
economic models of rising complexity level, blending mathematics needed to calculate
compound interest, along with moral philosophy and ethics. Economics is the system to
understand as well as control the materialistic world and prevent the emerged and
developed risk across the world in the staggered way. With the growth of the societies and
trade, theories of economics turned out to the statistics, mathematics, computational
modeling, used by the economists to assist in guiding the policymakers. Further, the
business cycle keeps on changing, booms and busts, measures of anti-inflation, and the
mortgage interest rates are the economic outgrowths. Therefore, the contribution made by
the different economists whether 20th or 21st century is of huge significance; the

6. understanding and knowledge of these contributions assists the government and market to
adjust the variables and make the decisions for the betterment of the overall economy and
the societies (Nelson, 2016).
Conclusion
Therefore, this report concludes that in the market economy, the demand and supply level
of all the goods and services helps in determining the level of price and quantity of the
goods & services in the economy. In case of Walmart, it has been found that this company
applies the law of demand and supply in its business operations to success in the market it
is serving. The demand for the products of Walmart is highly influenced by their prices. The
customers reduce their purchases, when prices are increased by Walmart, given the
determinants of demand are constant. Moreover, the supply increases, when price
increases, given the determinants of supply are constant. Further, the conventional
fundamental theories of economies still exist, and are applied to the business organization;
however, because of changing business environment, contemporary economics has
witnessed some improvement in these theories. However, the changes are never
permanent, the economic theories will continue to evolve with the coming period.
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