Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 3 (1569 words) Published: November 3, 2014

Microeconomics and the Laws of Supply and Demand
October 3, 2014
Microeconomics and the Laws of Supply and Demand
The simulation in the text is about a small city by the name of Atlantis. Atlantis is a well-maintained city with many positive aspects for the community. All of the aspects make it a pleasant living environment. For example, the city has maintained streets, maintained sidewalks, large parks and jogging paths. To rent an apartment in the community of Atlantis an individual would have to go through Good life Management. The current vacancy rate is at 28 percent of availability. The principles of microeconomics and macroeconomics help to explain why vacancy decreases to 15 percent. Knowing this information helps the rental company understand supply and demand curves. The supply and demand curves advise when to lower or raise the rent. This paper will discuss how the price elasticity of demand affects a consumer's purchasing and the firm's pricing strategy as it relates to the simulation. Macroeconomics and Microeconomics

The simulation discusses the study of both Macroeconomics and Microeconomics. The term Macroeconomics focuses on factors that affect the economy as a whole. Lintech Company, which was introduced in the scenario, led to the whole economy of the city of Atlantis, not just the financial situation of Good-life Management firm. Lintech perceived the increase of residential demands due to the company workers that relocated in the area. However, in the scenario, when the firm increased the rental price due to demand, Good-life's apartments became high-priced, and not too many people were able to afford it. The city of Atlantis council to place a cap of $1,550 limit on rental rate (Colander, 2014). On the contrary, the concept of Microeconomics exhibited on scenarios was much more effective and ideal. Supply and demand are the two microeconomic principles that appear in this simulation. When discussing the rental apartments in...
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