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Supply&Demand Essay

838 words - 4 pages

Week 2
Supply and Demand Simulation
Cindy Barnes
University of Phoenix
Economics for Business
ECO 360
Richard M. McIntire, Ph.D.
August 27, 2007

Supply and Demand Simulation
Summary of Simulation
In the supply and demand simulation, numerous decisions must be made for the supply and demand of two-bedroom rental apartments in the Atlantis area. Each decision made will effect the demand curve, supply curve, as well as equilibrium. Various factors are visited that directly impact supply and demand which ultimately effect equilibrium. During the simulation price ceiling pose a large impact on quality demand and quantity supplied. Monthly rental rates or quantity ...view middle of the document...

Key Point Emphasized
Long run and short run
One important point that was emphasized in the reading assignment as well as the simulation was that with macroeconomics analyzing two frameworks is vital for a business. The long run framework is very important to examine the overall growth of the organization. The short term framework is significant in observing the cycle of a business. However, inflation does fall within both frameworks. The essential idea behind having two frameworks is that through viewing each separately, efficiently managing all aspects of an organization is much more obtainable.
Keynesian model
The Keynesian model believes that equilibrium income does fluctuate. The chief problem with these fluctuations is that equilibrium income is strictly based on long run income. In the short run incomes are fluctuating thus effecting the long term income potential. Small adjustments in short run income can equate to large differences in long run equilibrium income.
Expectations
When attempting to reach equilibrium, an organization must closely examine all expectations. Various expectations can effect the overall outcome. Numerous factors that will create a shift in expectations. Expectations of different nature in aggregate demands will generate a shift in the aggregate demand curve. If the future is expected to require a large demand, the production of a product will increase to meet a higher demand.
Quantity theory
A final point that was emphasized in both the reading and the simulation was the quantity theory as the theory relates to inflation and money. There is no way of avoiding inflation. Inflation is everywhere. As monetary supplies continually rise, prices will...

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