Supply and Demand SimulationRobert T. Crawford IIIECO/365 February 25, 2014Leonard Blackwell
SUPPLY AND DEMAND SIMULATION
SUPPLY AND DEMAND SIMULATION
Supply and Demand SimulationThe concept for microeconomics pertaining to this simulation is the change in choice that alters the demand for family home purchases. The altering in desires from residential homes diminishes the demand only and not the existing supply. Another way to look at this microeconomic viewpoint is the effect of an unfavorable buyers economy has on the need for the residential homes. The increasingly number of families with financial means desiring to purchase homes sparks the increase in demand, while the supply of homes remains constant. This concept exemplifies the microeconomic model because microeconomics exists solely on supply and demand of corporations or individual purchasers. The adverse buyers market and the need for homes tie directly into the consumers' preferences model pertaining to the microeconomic concepts. Remember, microeconomics is the study of individual choice and how the choices made by individuals become influenced by economic forces. On the other hand, the macroeconomic concepts relate to the cost of the homes and the invisible hand that drives to higher demand and the market rates above the equilibrium price that leads to lower demand. The influence of consumers' individual choices is mute when discussing macroeconomics. Macroeconomics is the study of the economy from a holistic perspective that relates to banking industry norms, interest rates, housing markets, and the GDP.A swing in the demand curve comes from the difference in partiality regarding the purchase of houses. This triggers a negative swing in the demand curve as the demand of homes shrinks while the supply stays constant. Consumers reversing their desires from a residential home to a trailer home shift the demand of residential homes so the demand for them will reduce. Allowing the homes to become rentals for local realty brokers to rent decreases the supply causing a negative swing along the supply curve in relations to for sale house. While some of the residential households that were available to the purchasers swing to the realty company as rental properties, the supply of these purchasable dwellings to buyers will shrink and cause a negative turn in the supply curve.Low equilibrium prices are the result of negative turns in the demand supply. Furthermore, since the quantity demanded has reduced the equilibrium quantity also reduces. This situation causes the quantity supplied to be greater than the quantity demanded. In other words, there are too many purchasable houses available than what the buyers are willing to pay. This causes a drop in purchase prices. The realty company negotiates reduced purchase price, which will lower the quantity supplied once homes are selling. Consequently, this causes a decline in the quantity supplied in attempts to eliminate the surplus....