Rental Apartments Simulation Analysis
Supply and Demand of Rental Apartments Simulation
Veronica L. Powell
University of Phoenix
ECO / 365
Liliana Fargo
November 10, 2009
Supply and Demand of Rental Apartments Simulation
GoodLife Management is a management firm that manages seven apartment complexes in Atlantis. GoodLife is the only firm that rents apartments in Atlantis and has subsequently created a monopoly within the market. The closest substitutes are rental detached homes which are provided by Oakridge Builders. GoodLife has offices across the United States. The responsibilities of the Property Manager includes receiving 30day notices for upcoming apartments, establishing new rental rates for the apartments, and setting advertising schedules. The …show more content…
First observation was the demand curve with the current rental rate and the quantity demanded. The second observation was the change in the quantity demanded and the vacancy rate when there is a particular rental rate. The decision to be made was the monthly rental rate for two-bedroom rental apartments on temporary leases. The Property Manager needed to bring the vacancy rate from 28 percent to 15 percent and to maximize the revenue. To start, the vacancy rate was at 40 percent, revenue was 1.56 (in millions), surplus 800, quantity demanded 1,200 and rental rate $1,300. The vacancy rate down to 15 percent, the following changed: revenue was 1.79 (in millions), surplus 300, quantity demanded 1,700 and rental rate $1,050. Although the appropriate rental rate was selected to reduce the vacancy rate, the revenue was not maximized. In the end the revenue could have been increased by lowering both the rental and the vacancy …show more content…
The law of demand states that quantity demanded rises as price falls, other things remain constant (Colander, 2008). Law of supply states that quantity supplied rises as price rises, other things remain constant (Colander, 2008). Price ceiling was mentioned towards the end, and refers to a limit imposed by the government on how high the price of a good (or service) can rise (Colander, 2008). The equilibrium is a state of balance where dynamic forces have canceled each other out and there is no tendency for change (Colander,
Veronica L. Powell
University of Phoenix
ECO / 365
Liliana Fargo
November 10, 2009
Supply and Demand of Rental Apartments Simulation
GoodLife Management is a management firm that manages seven apartment complexes in Atlantis. GoodLife is the only firm that rents apartments in Atlantis and has subsequently created a monopoly within the market. The closest substitutes are rental detached homes which are provided by Oakridge Builders. GoodLife has offices across the United States. The responsibilities of the Property Manager includes receiving 30day notices for upcoming apartments, establishing new rental rates for the apartments, and setting advertising schedules. The …show more content…
First observation was the demand curve with the current rental rate and the quantity demanded. The second observation was the change in the quantity demanded and the vacancy rate when there is a particular rental rate. The decision to be made was the monthly rental rate for two-bedroom rental apartments on temporary leases. The Property Manager needed to bring the vacancy rate from 28 percent to 15 percent and to maximize the revenue. To start, the vacancy rate was at 40 percent, revenue was 1.56 (in millions), surplus 800, quantity demanded 1,200 and rental rate $1,300. The vacancy rate down to 15 percent, the following changed: revenue was 1.79 (in millions), surplus 300, quantity demanded 1,700 and rental rate $1,050. Although the appropriate rental rate was selected to reduce the vacancy rate, the revenue was not maximized. In the end the revenue could have been increased by lowering both the rental and the vacancy …show more content…
The law of demand states that quantity demanded rises as price falls, other things remain constant (Colander, 2008). Law of supply states that quantity supplied rises as price rises, other things remain constant (Colander, 2008). Price ceiling was mentioned towards the end, and refers to a limit imposed by the government on how high the price of a good (or service) can rise (Colander, 2008). The equilibrium is a state of balance where dynamic forces have canceled each other out and there is no tendency for change (Colander,