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Supply And Demand Simulation Essay

1205 words - 5 pages

Supply and Demand Simulation
Supply and demand plays an intricate role in the amount, price, and availability of products and services. The applying supply and demand concepts simulation guides users through making decisions for Goodlife, a management company for 2 bedroom apartments in Atlantis. The simulation names the user the property manager; responsible for vacation residents, new pricing for units, and advertising. The property manager makes decisions in circumstances including the changing of supply cure, demand curve, microeconomics, macroeconomics, and the equilibrium of price and quantity. All of these decisions move the business along as conditions change around it.
Demand Curve Shift
Lintech Expansion
The demand curve follows a distinct line unless some other factor causes the line to shift. The demand curve operates under the principle if the demand goes up the price goes down, and likewise if the demand goes down the price goes up as long as all other things are constant. A shift in the demand curve indicates something is not constant. In the simulation, a company named Lintech expanded its operations to Atlantis. The expansion increased the population of Atlantis changes the demand for apartments, but does not change the supply of apartments in the area. The sudden shortage of apartments created a demand curve shift. The shift permits Goodlife to offer a higher price for their 2 bedroom apartments, and still be able to fill the same number of units. By increasing the price, Goodlife brought the price and quantity available back into equilibrium (University of Phoenix, 2014).
Detached Homes
A few years later, the market shifted and people became more interested in detached homes than apartment homes. Once again, Goodlife finds itself needing to decide what direction to take. This demand curve shift triggers Goodlife to reduce rental rates to maintain occupancy in their apartments. Goodlife reduces their rental rates in order to reach equilibrium and continue to rent the same number of apartments (University of Phoenix, 2014). The expectation is when the demand goes down the price goes up, but because the demand curve shifted, the opposite effect occurred.
Supply Curve Shift
Switch to Condominiums
The supply curve follows a similar concept as the demand curve. The supply curve states the quantity rises as price rises, and similarly the quantity falls as price falls if all other things are constant. A shift in the supply curve indicates something is not constant. In the simulation, Goodlife decides to convert some of their apartment homes to condominiums. The switch is in response to the growing interest in detached homes. Goodlife decided to decrease their supply of apartments to equalize the rent rate at a higher threshold. The supply change coupled with a further demand shift lowered rates, but not as far as it would have been if the supply stayed the same. The reduction of rental units available caused s supply curve shift...

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