Annexure-V-Cover Page For Academic Tasks: Learning Outcomes

Annexure-V- Cover Page for Academic Tasks
Course Code: ECO518 Course Title: Macro- Economics and Policy
Course Instructor: Dr. Pooja Kansra
Academic Task No.: 03 Academic Task Title: Assignment
Date of Allotment: 31-03-20 Date of submission: 23 rdApril 2020
Student’s Roll no: A23, A24, A25, A26 Student’s Reg. no:
Evaluation Parameters:
Learning Outcomes:
 Investment decisions are largely influenced by expectations of future demand conditions Substantiate
Declaration:
We declare that this Assignment is our group work. We have not copied it from any other student’s
work or from any other source except where due acknowledgment is made explicitly in the text, nor
has any part been written for me by any other person.
Student’s Signature:
Lokesh Kumar Prajapat, Swami, Kamaldeep, Sourabh
Evaluator’s comments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of the assignment
Evaluator’s Signature and Date:

Peer Rating
Name Marks
Lokesh Kumar Prajapat 10
Swami 10
Kamaldeep 10
Sourabh 07
TABLE OF CONTENTS
S.No. Contents
1 Introduction
2 Investment Decision
3 Looking to the future
4 Real life examples
5 Conclusion & Reference
Investment decisions are largely influenced by expectations of future
demand conditions substantiate
Introduction
In this report we will see the effect of demand on a firm's investment decisions the
variance of future demand and price shock.
A company always invest its money in some areas to gain profit out of it in future.
AN investment is a quality or item that's purchased with the hope that it'll generate
financial gain or appreciate within the future. In AN economic sense, AN
investment is that the purchase of products that aren't consumed these days
however are utilized in the long run to form wealth. In finance, AN investment
may be a financial quality purchased with the thought that the quality can offer
financial gain within the future or appreciate and be sold at.
Almost all the decision that are taken to make an investment are taken by carefully
reading, analyzing the future demand of the company, market, consumer, stake
holders etc.
These investment decisions determine how the funds will be distributed or invested
in different assets .these decisions are sometimes
 Long term
 Short term
Long term decision are called capital budgeting decision (involves huge amount of
investment in long term) and short term decision are called working capital
decision (it affect day to day working of business)
Investment Decision
The Investment Decision relates to the decision made by the investors or the top
level management with respect to the amount of funds to be deployed in
the investment opportunities. Simply, selecting the type of assets in which the
funds will be invested by the firm is termed as the investment decision.
Buyer’s expectation and demand determinant

The expectations that buyers have concerning the future price of a good, which is
assumed constant when a demand curve is constructed. Buyers' expectations are
one of five demand determinants that shift the demand curve when they change.
The other four are buyers' income, buyers' preferences, other prices, and number of
buyers.
The decision to purchase a good today depends on expectations of future price.
Buyers seek to purchase a good at the lowest possible price. If they expect the
price to rise in the future, they are inclined to buy more now. If buyers expect the
price to decline in the future, they are inclined to buy less now.
Looking to the Future

Buyers make buying decisions based on a comparison of current and future prices.
They are motivated to purchase the good at the lowest price possible. If that lowest
price is the one existing today, then they will buy today. If that lowest price is
expected to occur in the future, then they will wait until later to buy.
Consider the example of Wacky Willy Stuffed Amigos, a cute and cuddly line of
stuffed creatures. Buyers decide how many Stuffed Amigos to buy, at a given
current price, based on their expectations of future prices.
 Price Going Higher: Suppose that news media throughout the country
report on the prospects of a worldwide shortage of stuffing, the same sort of
stuffing used to stuff Wacky Willy Stuffed Amigos. Every expert
interviewed projects that the higher stuffing prices will most assuredly cause
an increase in the price of Stuffed Amigos. The price increase has not yet
occurred, but it most assuredly will occur. Everyone expects it to occur.
With this news, anyone pondering the purchase of Wacky Willy Stuffed
Amigos will be inclined to make their purchase now, without delay. As
such, current demand increases.
 Price Going Lower: Alternatively, suppose that The Wacky Willy

Company, the firm that produces Wacky Willy Stuffed Amigos announces
that it has developed a new production technique, that when implemented
will allow them to sell Stuffed Amigos at half their current price. This news
is greeted enthusiastically by Stuffed Amigos collectors. They expect to
purchase Stuffed Amigos at a lower price in the near future. With this news,
anyone pondering the purchase of Wacky Willy Stuffed Amigos today will
likely postpone their purchase until later, at the lower price. As such, the
current demand decreases.
Shifting the Demand Curve
A change in buyers' expectations causes the demand curve to shift. This can be
illustrated using the negatively-sloped demand curve for Wacky Willy Stuffed
Amigos presented in this exhibit. This demand curve captures the specific one-to-
one, law of demand relation between demand price and quantity demanded.
Buyers' expectations are assumed to remain constant with the construction of this
demand curve.
Buyers' Expectations
 Expecting Higher Prices: If buyers expect that the price of the good will be
increasing in the future, they are likely to buy more today. This causes an
increase in demand and a rightward shift of the demand curve.
 Expecting Lower Prices: If buyers expect that the price of the good will be
decreasing in the future, they are likely to buy less today. This causes a
decrease in demand and a leftward shift of the demand curve. Click the
[Expect Lower] button to demonstrate.
The Financial Power of Expectations
Buyers' expectations (especially when combined with sellers' expectations) play a
critical role in the markets for numerous goods. At the very top of this list is the
whole assortment of financial markets, especially the stock market. Those who buy
and sell corporate stock do so largely based on expectations of future stock prices.
For example, Winston Smythe Kennsington III, noted Shady Valley financial guru,
might be willing to pay $50 each for a few thousand shares of OmniConglomerate,
Inc. stock today if he expects that the price will exceed $50 in the future.
Alternatively, he might be inclined to sell his shares of OmniConglomerate, Inc.
stock today if he expects that the price will fall below $50 in the future.
Real life examples

In real life we can see a lot of examples that proves that investment decision are
influenced by future demand .let us take an example of Jio, the Indian telecom
sector was suffering from high data rates, expansive, calls, pure connection etc.
The need of the market was to find a solution of these problems. Mukesh ambani
then took an advantage of the situation and launched Jio in Indian telecom sector.
Ambani then invested a whole lot of money in its firm and launched Jio, which
provided very cheap data and calling to the Indians customers and within 2 years
this investment has made Jio the top brand in Indian telecom sector, so this case
was truly an example of how future demand influence the investment decision.
Let us take another example of manufacturing firm which has 5 heavy machinery
working simultaneously on production of two wheelers. Now suppose one of his
machine got damaged and he is not getting so much of orders from market so what
will he do?
He has 2 option the first is to invest his money on buying new machine and
replacing the old damaged one even if there is no need to invest money on this.
The second option is to invest his money somewhere else rather than on new
machinery as he is not getting sufficient orders. So the smart decision will be the
second one as the second option truly work according to the demand and
investment concept. High demand means high investment.
In this covid-19 pandemic time the sales of medical mask, sanitizers and hand
washes are going high in the market. Now most of the companies are investing
their money in these things as the demand condition of the market is a highly
related to these medical necessities.
China is currently the largest manufacturer of PPE kits and covid-19 testing kits.
These products were the future demand condition and selling and exporting these
things to other nations has made china the only consistent economy in the world, in
this pandemic which is affecting the whole economy.
Conclusion
Through the studies and the points discussed in this report we can say that the
investment decision may varies from situa6 to situation. But these decision
definitely are influenced by the future demand conditions. The examples that we
have discussed in this reports show the proofs of agreement with this statement.
The investment which has been done by keeping the need of the market, the
demand of the market and the type of market will always be beneficial for a firm or
an investor. A good study about the market can tell a lot about the need, growth,
profit, competitor and demands of the market.
Almost every businessman puts his money into something that is in trend or will be
in trend in future. What a market may need in future is the key question that
resolves the confusion in one's mind before investing the money. The investment
will be worth only and only if it gives the desired output which is profit.
References
 Amosweb.com
 Businessjargons.com
 Toppr.com
 Fao.org
 Britannica.com
 Economicdiscussons.net

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Annexure-V- Cover Page for Academic Tasks

Course Code: ECO518 Course Title: Macro- Economics and Policy

Course Instructor: Dr. Pooja Kansra

Academic Task No.: 03 Academic Task Title: Assignment

Date of Allotment: 31-03-20 Date of submission: 23 rdApril 2020

Evaluator’s comments (For Instructor’s use only)

Evaluator’s Signature and Date:

Lokesh Kumar Prajapat 10

Buyer’s expectation and demand determinant

Looking to the Future

 Price Going Lower: Alternatively, suppose that The Wacky Willy

Real life examples

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