Laws of Supply and Demand

Topics: Supply and demand, Microeconomics, Elasticity Pages: 2 (1235 words) Published: October 31, 2014

Microeconomics and the Laws of Supply and DemandECO/365October 13, 2014Professor CoulibalyComedian P.J. O’Rourke said it best when he said, “microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about money you don’t have, and macroeconomics is about money the government is out of” (Beggs, 2014). On a serious note however, macroeconomics and microeconomics are different from each other yet both play a crucial role. The Atlantis simulation gave a great example of the two important aspects of economics, microeconomics and macroeconomics. This simulation showed different scenarios and situations of the property management firm in the city of Atlantis, Goodlife Management. Those scenarios were based on differing situations and showed how different factors influenced the equilibrium. Those scenarios varied such as adjusting the rental rate of the apartments to maximize revenue, attempts to increase the price to make attempts at meeting sufficient number of apartments available for rent so as to satisfy the demands, and finally changing Goodlife’s normal way of doing business, that of renting apartments. The simulation changed rentals to homeownership to try to meet the need of the growing population due to Lintech Inc.’s move into the neighborhood. Understanding those principles as well as understanding the price elasticity of demand will help in understanding the importance of how higher and lower demand can have a direct impact on prices. Macroeconomics focuses on factors that affect the economy as a whole and in the Law of Supply and Demand scenario where the company Lintech was introduced, the changes led to the economy of Atlantis, not just Goodlife’s financial situation. The firm perceived the increase of residential demands due to Lintech’s workers who relocated in the area. However, when the firm increased the rental...

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