Supply and Demand Simulation Eco 365

Supply and Demand Simulation

SKG

ECO/365

March 31, 2014

Dr. Ed Hartmann

Supply and Demand Simulation

The main purpose in the simulation is to highlight the supply and demand by GoodLife Management based on the rental apartments that are located in Atlantis fictitious town. The supply and demand of the simulation is affected by many changes including shifts in the supply and demand decisions made by management of GoodLife. “Demand is defined as the quantity (or amount) of a good or service people are willing and able to buy at different prices, while supply is defined as how much of a good or service is offered at each price” (Whelan J. & Msefer K. (1996, pg. 9). Simulation presents two microeconomic and macroeconomic principles. Price elasticity of demand in the simulation also has an impact on determining the pricing and consumer’s demand. Price, equilibrium, supply and demand, and shifts in the supply and demand are the four key points that emphasizes the simulation that can also be relate to the workplace.

Microeconomic and Macro Principles

Simulation presents two microeconomic concepts: supply and demand about rental apartments in Atlantis. From the point of macroeconomic, the changes in population trends about making choice whether or not to rent the apartment and the factors that influences these changes can be arguable because according to Colander, (2010) the law of the demand states that price fall increases the quantity demanded and that supply law asserts the quantity supplied decreases as price falls (Colander, (2010). The two-bedroom apartment’s supply has reached to 2,000. The monthly vacancy rate is 28% that must be decrease to 15% to increase the revenue of the company which is the reason that the rental rate must decrease to increase the demand and decrease the vacancy rate.

Shifts of the Supply and Demand Curves

As the number of apartments increases, the supply...