Supply Demand

Topics: Supply and demand, Economic equilibrium, Economics Pages: 4 (1212 words) Published: September 29, 2013
Supply and Demand Simulation

Supply and Demand Simulation
The simulation for the supply and demand included management decisions involving two- bedroom rental apartments owned by GoodLife Management firm located in Atlantis. The property manager team job consisted of adjusting monthly rental rate for maximizing revenue based on quantity supplied apartments in the economy. Each scenario presented different economics factors, variables, and issues that required management decision as analyzed below.

Supply and demand is a fundamental analytical concept of microeconomics stating that price determination is set when the quantity of a good or services supplied meets the quantity demanded (Colander, 2010). The idea of demand represents the general activities of wants and desires demanded by consumers, whereas supply indicates those of producers. Another concept of microeconomics determined by the point of interaction in which quantity of supply equals to quantity of demand is known as equilibrium (Colander, 2010). The law of supply and demand commands the price to be at the equilibrium point. Prices lower than the equilibrium will increase by reason of extra demand factors. If prices exceed the equilibrium price, it will decrease by reason of less demand factors.

In the supply and demand simulation because GoodLife is the only firm in Atlantis that rents apartments it has established a macroeconomics concept in the market as a monopoly (Marshchak, 2010). According to the macroeconomics principles of monopoly GoodLife is free to raise and lower monopoly prices to maximize revenue potential as they see fit in the current market. In the beginning of the simulation because GoodLife were the only firm that supplied rental apartment the government established the macroeconomics concept of a price ceiling in the market (Marshchak, 2010). The government imposed price ceiling protected the Atlantis consumer from higher rental price above the price of equilibrium....

References: Colander, D. (2010). Economics (8th ed.). New York, NY: McGraw-Hill.
Marshchak, J. (August). More Pitfalls in Demand and Supply Curve Analysis. Quarterly Journal of Economics, 48(4), p749-766. Retrieved from http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=e0171d7e-f9e9-43a7-94c2-29b909c3d2a9%40sessionmgr15&vid=3&hid=1
University of Phoenix. (2010). Economics for Business Simulation. Retrieved from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/UBAMsims/economics1/economics1_supply_demand_simulation.html
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