Supply and Demand Simulation

Supply and Demand Simulation

ECO/365

April 8, 2013

Supply and Demand Simulation

The supply and demand simulation expounded upon many factors including supply and demand in the broad scope of both microeconomics and macroeconomics. The real estate managing firm, GoodLife Management, is a company who manages rental apartment complexes in a town called Atlantis. GoodLife is the only company that rents two-bedroom apartments in the area. Lintech, a new company that shows promise to the area by adding jobs moves to Atlantis, and an increase in the demand for housing causes some change in both prices and supply, (University of Phoenix, 2013).

One example of a principle of microeconomics in the simulation is the concept of reaching equilibrium, where the opposing forces of supply and demand become equal (Colander, 2010). When the prices for the apartments were above equilibrium, the quantity supplied exceeded the quantity demanded, and there was a surplus of two-bedroom apartments on the market. Since GoodLife was willing to sell more apartments than consumers were willing to pay for, there was pressure to reduce the price. Thus, the price would need to be reduced until the equilibrium was met again, (University of Phoenix, 2013).

Another example of a principle of microeconomics in the simulation is opportunity costs. Opportunity cost is basically, what someone would give up to attain what they desire (Colander, 2010). In the simulation, there was mention of employees who worked outside of the city because they were not willing to pay the prices to live in town closer to their jobs. These employees would give up a short commute in order to save money, (University of Phoenix, 2013).

An example of a principle of macroeconomics that is shown in the simulation is the imposed price ceiling by the government. This is because macroeconomics involves the study of economy as a whole and more so focuses on...