The laws of supply and demand are the fundamental concepts behind economics that assist in the understanding of microeconomics and macroeconomics. The simulation involves a hypothetical real estate company that must alter their prices, supply, and demand based on the different market situations of their region. GoodLife was forced to change their prices and quantity supplied based on several factors like changes in population, price ceiling, and low rental rates in neighboring towns in order to meet the equilibrium price and generate the most revenue. These decisions caused a shift in the supply and demand curve once the imbalance was settled and equilibrium of supply and demand was met.
The simulation exercises many basic principles that are related to the fields of microeconomics and also on a larger scale to macroeconomics. Throughout the simulation many concepts of microeconomics were exercised through the interactions of supply and demand. Not only are these two of the most significant concepts of microeconomics, but they also assist in bringing more detailed examples into perspective. The exchange between supply and demand as prices and quantities were interchanged leads to a better understanding of the principles of equilibrium. The situations posed in the simulation forced GoodLife to alter their prices and supply to meet the equilibrium price as dictated by the invisible hand of the market. The simulation also exercised another principle of microeconomics, excess supply, as GoodLife was interested in making the best decisions yielding them the most profit. The simulation proved to be very informative as it tested how excess supply can hurt the company, while lowering prices dramatically and reducing the surplus of apartments actually generated a greater profit. These concepts exercise the ideas of microeconomics because they deal with the individual factors that apply to supply and demand while concentrating on how prices affect the growth of the...
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