Supply And Demand Simulation Essay

1745 words - 7 pages

Principles of Microeconomics
December 17, 2015
Robert Dratwa

In this simulation several scenario were presented. It was the student’s responsibility to use the information learned from assigned reading material to apply the learned concepts to make the correct decisions.
The housing market in Atlantis comprises of both detached homes and apartments. The simulation explains the supply and demand of 2 bedroom rental apartments in Atlantis. The three subjects demand curve, the supply curve, and equilibrium are explained. The impact of a price ceiling on quantity demanded and quantity supplied of two bedroom rental apartments are discussed. The closest substitute to a two ...view middle of the document...

A higher price for a product is an incentive to supply more. Therefore, as the rental rates increases, the number of apartments that Goodlife is willing to lease increases. This could be because the production cost, or the maintenance cost, increases for each additional unit of the product. The increasing maintenance cost means that each additional unit of the product would be supplied at a higher price. The supply curve is, therefore, upward sloping. As the rental rate is increased, the number of apartments supplied increases. For some suppliers a higher rental rate is an incentive to lease more apartments, however, a high rental rate also means lower quantity demanded of apartments.
The point at which quantity demanded equals quantity supplied is the equilibrium point. At equilibrium, the market is in a state of balance and there is no incentive for either suppliers or consumers to change their respective quantities. The rental rate corresponding to this point is called equilibrium rental rate, and the corresponding quantity is called equilibrium quantity.
At any rental rate above equilibrium, the quantity supplied is more than the quantity demanded and there is a surplus of apartments in the market. This means GoodLife would have supplied more apartments than potential tenants would be willing to pay for. For potential tenants to increase quantity demanded the rental rate has to decline, because quantity demanded increases only when price decreases. As the rental rate decreases, quantity supplied of apartments also decreases. There would be less incentive to supply at a lower price. The surplus becomes smaller and smaller as the rental rate decreases, leading to an increase in quantity demanded and a decrease in quantity supplied. This adjustment continues until equilibrium is attained.
At any rental rate below equilibrium, the quantity demanded is more than quantity supplied, leading to a shortage of apartments in the market. Potential tenants would be willing to pay for more apartments than Goodlife would be able to supply. To increase quantity supplied, the rental rate would have to increase, because more is supplied only at a higher price.
Lintech, Inc. has decided to set up office in Atlantis. The company has had a successful growth over the last three years Due to the company’s successful debut of the “Customer Relationship Management Solutions” as a result of this growth the company was able to expand into the city of Atlantis. The result of Lintech, Inc, expansion into this new area would bring an increase in population. An increase in rental rates was in response to the increase in demand. An increase in population increases the demand for rented apartments. But does not affect the supply of these apartments. At any given rental rate, more people demand rented apartments. The results is an increase in demand. Thus the demand curve shifts to the right.
The increase in demand means that quantity demanded is more than quantity...

Other Papers Like Supply and Demand Simulation

Supply and Demand Simulation Paper

1124 words - 5 pages Supply and Demand Simulation Paper Roberta Barker ECO/365 August 25, 2014 Dennis Mc Guckian Supply and Demand Simulation Paper The simulation presents real-world scenario of how shifts of the supply and demand curve affect the equilibrium price and how understanding these concepts aids in the decision-making process. At each stage, new variables are introduced causing the shifts of the supply and demand curves the challenge is to

Supply Demand Simulation Essay

933 words - 4 pages Supply Demand Simulation Macro and Microeconomic Principles From the simulation, the two major microeconomic principles are supply and demand. The simulation majorly focuses on the supply and demand of rental properties in Atlantis. In addition, the influences on supply and demand form the major topic discussed in the simulation. The macroeconomic factors clearly stated in the simulation are changes in the population trend, choosing to rent or

Supply And Demand

308 words - 2 pages The GoodLife Management supply and demand simulation is based on the management of 2500 two-bedroom condominium apartments in a fictitious town named Atlantis. According to the simulation they are the only management firm in Atlantis and have a monopoly in the market. The simulation shows the issues the management deals with and gives the opportunity to see how the right or wrong decisions can affect the outcome of those decisions. What causes

Supply and Demand

575 words - 3 pages categorized these principles or concepts as macroeconomic or microeconomic. Economic theory is divided into two parts: microeconomic theory and macroeconomic theory. Microeconomics is the study of individual choice, and how that choice is influenced by economic forces. In the simulation two principles of microeconomics were highlighted, Supply and demand. The demand curve shows the quantities of a particular good or service that buyers will be

Supply and Demand

1013 words - 5 pages "Microeconomics Law of Supply and Demand" ECO 365 July 6, 2015 Michael Blakley "Microeconomics Law of Supply and Demand" The simulation of “The Laws of Supply and Demand” provided a wealth of information about how crucial micro and macroeconomic is to the economy. Green Life Apartments in Atlantis city depicted the impact of various economic factors; in which it was apparent that micro and macroeconomic played a role in this scenario. In

Supply and Demand

920 words - 4 pages Petroleum Prices and Demand Abstract This week's simulation is centered on GoodLife Management. GoodLife Management is located in a town by the name of Atlantis, where the company rents two-bedroom apartments on a month-to-month basis. This paper will cover the simulation’s supply and demand for two bedroom apartments, the concepts of microeconomics and macroeconomics principles, the shifts in supply and demands, and how the equilibrium is

Supply and Demand - 925 words

925 words - 4 pages Running head: SUPPLY AND DEMAND SIMULATION Supply and Demand Simulation University of Phoenix ECO 365 Introduction A number of factors, including price increases or decreases, cause changes in supply and demand. An incremental decrease in the rental price led to a huge increase in the demand for houses. Similarly, an increase in the rental price of two roomed apartments caused a decrease in the demand of houses by a significant margin

Supply And Demand

915 words - 4 pages Supply and Demand Simulation Supply and demand is an important concept for both macroeconomic and microeconomic. The week two assignment reveals how an apartment company in the city of Atlantis is changed by many different economic points. The microeconomics ideas can be shown as the changes in the supply and demand and even the equilibrium, since the topics are only having affects on the small apartment. The macroeconomic ideas can then put

Supply And Demand

876 words - 4 pages Name: Professor: Institution: Date of Submission: The simulation concerns a supply and demand for two-bedroom rental apartments in Atlantis. There are several factors that affect demand and supply of the two-bedroom apartments leading to shift in both the demand and supply curves. One of the microeconomic principle in this simulation is the law of increasing opportunity cost because it states that production

Supply and Demand - 748 words

748 words - 3 pages Supply and Demand Simulation ECO/365 Rex Draughn November 19, 2013 Microeconomics is “the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and

Supply And Demand - 345 words

345 words - 2 pages Assignment #2: Supply and Demand Knowledge and Understanding (/4) 1) Explain in your own words the concepts of supply and demand. Communication (/5) 2) Our school cafeteria sells a very limited amount of healthy foods such as low fat wraps, fresh fruit and high fibre breads. Write a proper paragraph that explains how the forces of supply and demand interact to produce the right amount of goods (food) at the right price – the equilibrium

Related Essays

Supply And Demand Simulation Essay

923 words - 4 pages Supply and Demand Simulation ECO/365 November 11, 2013 Supply and Demand Simulation Microeconomic and Macro Principles As per the simulation, the two major principles of microeconomics are demand and supply. The simulation focused majorly on the demand and supply of rental properties. The simulation clearly states that the macroeconomic factors are changes in the population trend. One of the factors that would directly influence these

Supply And Demand Simulation Essay

564 words - 3 pages Supply and Demand Simulation Andrea Nelson ECO/365 May 12. 2014 Vilma Vallillee Supply and demand simulation From the University of Phoenix supply and demand simulation I identified a few microeconomic and macroeconomic principles. Monopoly and Maximizing revenue are two microeconomic concepts. Colander (2010) explains that microeconomics is “the study of individual choice, and how that choice is influenced by economic factors (p. 15

Demand And Supply Simulation Essay

1105 words - 5 pages Supply and Demand Simulation Nora Chaparro ECO/365 April 28, 2014 Frank Vigil Supply and Demand Simulation According to Adams (2002), microeconomics is the interaction and behavior of individual units in an economy. On the other hand, however, he says that macroeconomics looks at the economy as an aggregate. While microeconomics has a narrow view of the economy, macroeconomics looks at the economy from a broad perspective. In the

Supply And Demand Simulation Essay

693 words - 3 pages Supply and Demand Simulation ECO/365 – Microeconomics Atlantis is a great town to live in. There is especially a great opportunity in the rental real estate market and only one company to supply rental apartments. The key is to apply the laws of supply and demand to suit the needs of the business to be the most profitable. Two Microeconomic and Macroeconomic Principles or Concepts Scenarios one and three are