Principles of Microeconomics 365
Matthew J. Angner
June 1, 2010
University of Phoenix Online
The supply and demand simulation was based on the management of rental apartments by GoodLife Management. The apartments are in a fictitious town called Atlantis. Topics that will be reviewed in this paper include changes in supply and demand, how shifts in supply and demand affects decision-making, key points from the reading assignments that were emphasized in the simulation, application of the supply and demand concepts at the author’s workplace, how price elasticity of demand affects the decision-making of the consumer and to the organization, and a summary of the results of the assessment. Causes for Change in Supply and Demand
The causes for changes in supply and demand in the simulation were driven by the availability of two-bedroom rental apartment, demand for these rentals, the quantity of available renters, and the price per month. In the simulation, the demand curve is downward sloping so as the price of the rentals decreased, the demand increased. However, the supply curve is upward sloping. The number of apartments increased as the price increased. A surplus in the market for the apartments exerts downward pressure on the price. Adversely, a shortage in the market exerts an upward pressure on price. To attract renters, GoodLife would need to lower prices if there were a surplus in the market or increase prices if there were a shortage in the market. In order to maintain the balance of quantity demanded and quantity supplied, GoodLife would need to raise their prices. Shifts in Supply and Demand
Management directional changes of GoodLife along with population changes within Atlantis and the neighboring areas affected supply and demand. Preference changes of the tenants caused the demand for apartments to decrease. GoodLife management converted rental apartments into condominiums to sell...