Eco 365

Topics: Supply and demand, Economics, Microeconomics Pages: 2 (782 words) Published: February 13, 2013
Supply and Demand
Economists believe they understand and can predict within a certain degree the outcome of general micro and macroeconomic phenomena. Microeconomics is the study of individual choice, and how that choice is influenced by economic forces (Colander, 2010). Macroeconomics is the study of the economy as a whole (Colander, 2010). As much as the regular person would like to ignore these same principles and simply live their lives they will be subjected to the harsh reality of economics. Economics explains why businesses run the way they do. A business owner can benefit tremendously from knowing what to expect based on the laws of economics. Economics is described as the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society (Colander, 2010). After reviewing the simulation on the student website it was determined that one of the microeconomic principles was normative economics. In Colander, 2010 the author describes normative economics as the study of what the goals of the economy should be. In the simulation the goals are set for us by the management. Also the concept of utility maximization would apply. As the consumer tries to balance the price and quantity of goods this example is about the amount of bedrooms and how much to pay. The shift in the supply curve in year one would either increase or decrease the amount of units rented at the cost the management team wanted. According to the simulation the amount the management team wanted for the apartment needed to rise to meet the increasing expense of maintenance. The shift is caused by the amount required to meet the suppliers expectations of price. The amount of units that are available to be rented is also affected. The shift in demand would only increase if price was lower. If demand increased then the supplier could afford to charge more and price would be affected. The cause of the shifts are...
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