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Supply and Demand Simulation

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Supply and Demand Simulation
Supply and Demand Simulation

Thomas Alejandro

ECO/365

February 17, 2014

Mubarak Laminu

Supply and Demand Simulation
The supply and demand simulation is based on the management of rental apartments by GoodLife Management in the fictional town of Atlantis. 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. GoodLife currently has 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. There are many changes to the simulation that affect supply and demand. There are also shifts in the supply and demand that affect the decisions made by GoodLife. There are four key points in the emphasized in the simulation; supply and demand, equilibrium, shifts in the supply and demand, and price ceilings. The concepts in the simulation can be related to the workplace of the author of this paper.
Factors that affect supply and demand in the simulation are driven by the availability of the rental apartments, the demand for the rentals, the number of available renters, and the price. According to the simulation, a demand curve is downward sloping. In the simulation, as the price decreased, demand increased. The supply curve, on the other hand, is upward sloping. The quantity of two-bedroom apartments increased as the price increased. A surplus in the market for the apartments exerts downward pressure on the price. This means to attract the possible renters, GoodLife would need to lower prices. On the other hand, a shortage in the number of available apartments exerts an upward pressure on the price. To maintain the balance of quantity demanded and the quantity supplied, GoodLife would



References: Keen, P. G.W. (1980). Decision support systems : a research perspective. DSpace@MIT, Retrieved from http://hdl.handle.net/1721.1/47172 Kroenke, D.M. (2012). MIS Essentials (2nd ed.). Upper Saddle River, New Jersey: Prentice Hall.

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