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Supply And Demand – Good Life Property Management Eco 360, Economics For Business I

1333 words - 5 pages

Supply and Demand - good life Property management this paper examines the economic phenomenon of supply, demand and equilibrium. Using the fictional organization of GoodLife Property Management in the town of Atlantis, the paper will summarize how the supply and demand curve is used to determine the equilibrium in the market for the lease of two-bedroom apartments. In addition, the paper will determine the difference between movement along the shift of the demand and supply curves which includes the determination of how equilibrium is re-established after the curves shift. The purpose of this simulation is to understand how the apartment market is affected by supply and demand.Decisions regarding supply, demand and market equilibrium require careful consideration. Many factors affect supply and demand such as preference, expectations, income, and rental rates. In order to make informed decisions the Property Manager must continually monitor supply, demand and industry trends in order to remain competitive in today's high performance, highly competitive environment.In order to make these decisions the Property Manager of GoodLife Management will depend on his organizations experts, Susan Hearst, National Property Manager, and Hal Morgan, Regional Property Manager, to help make informed decisions when adjusting the monthly rental rates and quantities supplied of two-bedroom apartments.GoodLife, as the only company offering apartments in the Atlantis area, currently has a monopoly on the market and can set the rental rate at their discretion. First, Susan Hearst, National Property Manager, has recommended that the vacancy rate be brought down to about 15%. In addition she has requested that the Property Manager maximize revenue. Understanding that the higher prices may keep some renters away Hal Morgan, Regional Property Manager, has recommended that the rental rates be lowered. The demand curve for the apartments is an imaginary line at a point in time- by lowering the rental rate to $950 per month Goodlife is able to rent 1900 apartments and maximize revenue at $1.81 million.Next, Susan Hearst has requested that each of the 2500 apartments that are available be rented out. Hal Morgan counters explaining that due to increased maintenance costs it would not be profitable to rent every apartment at the current rate. In order to lease additional apartments the rental rates must increase. As lease rates increase so does the number of apartments that GoodLife is willing to lease. In order to lease 2500 apartments the rental rates must increase to $1550 per month. In this scenario, the supply curve is upward sloping - the higher the lease increases the more apartments the organization is willing to rent.Surveys reveals that people who live in Atlantis are living in neighboring towns because of the lower rental rates. In order to capture this demand and maintain no imbalance between quantity demanded and quantity GoodLife must lower the lease rates on...

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