ECO 365/Week 2

Topics: Supply and demand, Elasticity, Microeconomics Pages: 3 (731 words) Published: December 12, 2013

Supply and Demand Simulation

Supply and Demand Simulation
Two principles of macroeconomics are local income and housing market growth in the town of Atlantis. I chose these because if the people of Atlantis’ have low income, they will not be able to pay for apartments in the area that have high rent. This would hinder the housing and apartment complex growth in the area because there would be no economic support.

Two principles of microeconomics are the choice to rent an apartment or buy a house and the pricing decisions made by Good Life Management. I chose these two principles because they both deal with individual choices that affect their local economic dynamics, both short and long term. The choice to buy or rent a house also deals with opportunity costs, based on economic theory (Colander, 2010). SUPPLY AND DEMAND CURVES

A shift in the supply curve in the Atlantis simulation occurred when a new company, Lintech, moved into town to set up their office. This caused a temporary shortage in the market because of the increase in demand but no increase to supply of apartments. This caused the rental rate to increase and the supply curve to move upward. A shift in the demand curve also happened when the new company arrived in town because demand for apartments increased. The increase demand caused the demand curve to move to the right. This signals a shortage of apartments available offered by Good Life Management. APPLICATION OF SUPPLY AND DEMAND

The concepts of supply and demand discussed in the simulation can be applied to my current are of employment. This is because I work in a gaming industry that involves the hotel business. When there are large tourism events in the local areas, the supply curve moves upward on almost every occurrence. This is because my employer operates the nicest hotel in the local area and everyone typically wants to stay at our hotel. For...

References: Colander, David. (2010). Economics (8th Edition). New York, NY: McGraw-Hill. p 15.
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