Supply and Demand
October 21, 2013
Supply and Demand
Atlantis a small city with a distinguished atmosphere that has paternal for grow. A company Goodlife is looking at the effects of supply and demand on two- bedroom apartment rental. Goodlife is a property management company that manages seven apartment complexes with two-bedroom unit for rent in Atlantis. Currently, Goodlife who has monopolized the rental units in the Atlantis area is the only company who manges the rental unit within the area.
Goodlife management is a monopoly in the apartment complex rental industry in Atlantis. Oakridge builders are a competitor trying to break up the ...view middle of the document...
The new people wanting to rent from Goodlife will cause a shift in demand for apartments. These shifts in demand cause a need for an increase in supply for apartments rentals.
When the prices are high fewer consumers will buy a product. This will cause a producer to reduce the amount they supply. When the prices are lower it will create more consumer demand. This will cause producers to supply more products to meet the demand of the consumer. When there is new demand for a product the shortage will cause the supplier to raise their price. Goodlife can raise their price to meet the demand of rentals. If Goodlife’s rental rates are too high and equal to Oakridge builders detached housing Goodlife could lose tenants to Oakridge. Goodlife will need to keep up with the supply demand by building new apartment complexes.
The new company Lintech in the area will create a percentage increase for area rentals. Percentage change in quantity demanded divide by the percentage change in price will give the price elasticity of demand. If the elasticity is greater than one in absolute valve it is elastic demand which is a good thing....