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Supply and Demand Simulation

ECO/365
November 27, 2012
William Mason

Supply and Demand Simulation
This supply and demand simulation teaches how to respond to changes due to the shifts in the market. Whenever there is a change that means several factors that need to be looked at. A number of factors, including price increases or decreases, cause changes in supply and demand. If demand rises, the supplier should increase supply to achieve larger profits from increased sales at higher prices. An increase in the rental price of two roomed apartments caused a decrease in the demand of houses by a large margin. Suppliers were willing to supply more houses at higher prices and fewer homes at reduced rents. A rise in the population of Atlantis led to a bigger demand for housing which then led the rise in rental prices. By doing this the suppliers were more willing to supply more units at improved rental prices. When the population decreased, the demand for housing dropped and the available units were leased out at lower prices. Naturally, the suppliers were not very happy about supplying all their units to the markets at reduced prices. Available substitutes affect the demand and the supply of a commodity. A number of people in Atlantis owned homes in the suburbs and did not need to rent houses in town. The demand for houses dropped and this made the suppliers cut back on supply or reduce rents in bid to attract more clients. When buyer trends moved from two bedrooms apartments to detached homes, the change in demand for apartments dropped while the demand for detached homes increased. Because of this result the suppliers increased the supply of detached homes. A negative shift in demand results in smaller amounts and because of this suppliers have to reduce supply. A positive shift in demand leads to a rise in amounts demanded and a positive shift in supply as suppliers get ready to take advantage of higher prices. As a supplier, the lower the price means the...
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