Supply And Demand Simulation Essay

1067 words - 4 pages

In this essay the focus is on the Supply and Demand Simulation on the University of Phoenix online resource page for Economics. The questions that will be answered are the following:1). What causes the changes in supply and demand in the simulation?2). How do shifts in supply and demand affect your decision-making?3). List four key points from the reading assignment that were emphasized in the simulation.4). How can you apply what you learned about the concepts of supply and demand form the simulation to your workplace?5). Summarize your results in the simulation.The first question to explain is what causes the changes in supply and demand in the simulation.To understand the changes in supply and demand in the town of Atlantis we first need to understand the definitions of supply and demand. According to David C. Colander the definition of the Law of Demand is the following:The Quantity demanded rises as price falls, other things constant.The Quantity demanded falls as price rises, other things constant.In the first scenario the regional property manager Hal Morgan of Good Life Management wants to increase the demand for their two-bedroom temporary month-to-month rental rates. In order to do this they need to lower the rental rate to \$1050.00 a month. This will bring the occupancy rate down from 28 percent to 15% and revenue will be at 1.79 million dollars. The quantity demanded rises to 1700 as the price of the two-bedroom apartments fall to the current rate of \$1050.00.The next scenario is dealing with the Law of Supply.According to David C. Colander the definition of the Law of Supply is the following:!). The Quantity supplied rises as price rises, other things constant.2). The Quantity supplied falls as price falls, other things constant.In the second scenario the regional property manager Hal Morgan of Good Life Management wants to increase the current rental rate from \$1100.00 to \$1550.00 a month. The increase in the price will also increase the quantity supplied to 2500. If all of the 2500 apartments were rented out at the rate of \$1550.00 this would be a cost benefit to Good Life Management because it would cover all the maintenance costs to keep all of the apartments rented out. On the supply curve the points would move upward and right showing the increase in price and supply. The third scenario describes equilibrium between demand and supply.In this scenario Good Life Management has found inconsistencies between demand and supply for the two bedroom apartments in the town of Atlantis. In order to remove this imbalance the quantity demanded of the two-bedroom apartments would have to be at 2000 and the quantity supplied would have to be at 2000. In economic terms this is considered and equilibrium of quantity demanded and quantity supplied. With this in place the apartment rental rate would be at \$1050.00 a month.The fourth scenario describes a change in the supply curve and demand curve of the rental of the two-bedroom apartments the...

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