Basic Concepts Paper

Basic Concepts

Kelli Cortez

University of Phoenix

Basic Concepts: Supply and Demand Simulation

In the Applying Supply and Demand Concepts simulation, basic concepts in applied economic was discussed. A property manager for Good Life Management out of Atlantis was described, and the goal of the simulation was to have equilibrium in the rental market. The amount of vacant units, apartments constructed, and apartments rented are how supply is affected; whereas, population, price, and preference is where demand is affected.

This paper will focus on how changes in the business environment can cause change in supply and demand, why marginal analysis is used in decision making and responding to shifts in supply and demand. The paper will also determine appropriate output levels, fixed, and variable costs of GoodLife Management. The document will conclude by focusing on a market situation in where the operating company faces economic difficulties.

Changes in the Business Environment: Changes in Supply and Demand

Over the course of nine years, supply and demand shifts for apartments were determined by the population, execution of price ceilings, renter preference, and change in direction for GoodLife management.

Tenant preference caused the decrease in demand for apartments. GoodLife management changed their apartments to condominiums because of tenant preference. Changing apartments to condominiums caused a decrease in the supply and demand that caused the supply and demand to curve to the left.

Income, consumer preference, income, taxes, and subsidies are affected by demand. Taxes, supplier expectation, and technology can affect the supply curve. The supply and demand will shift depending on the factors that are at work. The supply and demand will then be affect at different levels is price. The shift in supply and demand is present in year five of the scenario. In year five the demand shift is caused by a new company in Atlantis. In...