March 28, 2011
The GoodLife Management supply and demand simulation is based on the management of 2500 two-bedroom condominium apartments in a fictitious town named Atlantis. According to the simulation they are the only management firm in Atlantis and have a monopoly in the market. The simulation shows the issues the management deals with and gives the opportunity to see how the right or wrong decisions can affect the outcome of those decisions. What causes the changes in supply and demand?
GoodLife Management wants to drop their vacancy rate to 15%, in order to change the demand they know they will have to lower the rental rate it will then change the supply and increase the quantity demand. The changes in the simulation that affect supply and demand are driven by the availability of the rental apartments, the demand for the rentals, price of the rentals, and the number of available renters. They can also be caused by changes in population, consumer preferences, and price ceilings. As the price of the rentals decreases it causes an increase in the demand, the opposite would have occurred if the prices would have been above the equilibrium. How do shifts in supply and demand affect decision making?
The quantity of two-bedroom apartments increased as the price increased. A surplus in the market for the apartments exerts downward pressure on the price. This means to attract the possible renters, GoodLife would need to lower prices. On the other hand, a shortage in the number of available apartments causes an upward pressure on the price. To maintain the balance of quantity demanded and the quantity supplied, GoodLife would need to raise the prices. The Four Key Points
Within the simulation there are four key points
•Supply and Demand
•Shifts in Supply and Demand
Definitions of the Key Points
Supply and demand
Supply and demand is perhaps one of the...