Supply and Demand Simulation

Topics: Supply and demand, Elasticity, Microeconomics Pages: 3 (1020 words) Published: February 3, 2013
Supply and Demand Simulation
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Supply and Demand Simulation
In the supply and demand simulation a neighborhood called Atlantis is given for the setting. Atlantis is a small city with open spaces, low population, and a low crime rate. There are plenty of sidewalks and street systems for easy access to the highway. The housing in Atlantis is detached homes and apartments. The supply and demand simulation consists of microeconomics and macroeconomics. The simulation presents shifts in the demand and supply curve, equilibrium, price, and quantity. Atlantis is a nice neighborhood with services consumers look for. A two-bedroom apartment in Atlantis is presented to show the effects of supply and demand. I am the property manager for GoodLife Management. GoodLife is the only firm in Atlantis that rents apartments; therefore GoodLife has a monopoly in this market (UOPX, 2013). The scenarios in the simulation show how price can affect supply and demand while in a competitive market. The microeconomics concepts in the simulation are the rental decision the management company has to make in order to decrease vacancy and maximize revenue. Determining the price and vacancy deals with supply and demand, to decrease how many apartments there are the company has to increase demand by lowing the rental rate. GoodLife has reached 2,000 two-bedroom apartments and is required to decrease the monthly vacancy from 28% to at least 15% to increase revenue. GoodLife has to find what rental rate to input so all expenses are covered. The macroeconomics in this simulation is the behavior of the whole company. By bringing the vacancy rate down to less than 15% enables the company to increase revenue. As the rental rate lowers revenue initially increases then reaches a maximum at particular rental rate at a quantity demand and decreases. A new company called Lintech is moving into the area, which increases the demand of apartments. The supply and demand curves in the simulation...


References: Colander, D. C. (2010). Economics (8th. Ed.). New York, NY: McGraw-Hill.
http://www.netplaces.com/economics/supply-and-demand/demand.htm
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