Supply and Demand Simulation

Supply and Demand Simulation

University of Phoenix

ECO/365: Principles of Microeconomics

October 26, 2009

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Supply and Demand Simulation

In the University of Phoenix simulation (2003), Applying Supply and Demand Concepts, a situation is presented concerning the supply and demand of two-bedroom rental apartments in Atlantis. Throughout the simulation scenarios are presented and choices must be made regarding "factors that affect demand and supply, and therefore, equilibrium" (University of Phoenix, 2003, para. 5).

Cause of Changes

The changes in supply and demand in the simulation are caused by different factors throughout the simulation. The causes included changes in vacancy rates, low rental rates in neighboring towns, imbalances between quantity demanded and quantity supplied at current rental rates, changes in population, personal incomes, affordability of apartments, and price ceiling.

Effects of Shifts in Decision Making

Determining whether the shift affected supply or demand, then if the supply or demand were decreased or increased, and if the shifts were to the left or right had to be taken into consideration before decisions could be made.

The illustration that accompanied Marshall's origi...

Perfectly inelastic demand

Perfectly elastic demand

A supply shift to the right indicated a decrease in the rental rate was necessary, whereas a supply shift to the left indicated an increase in the rental rate was necessary to reestablish equilibrium. A demand shift to the right indicated an increase in the rental rate was necessary, while a demand shift to the left indicated a decrease in the rental rate was necessary to reestablish equilibrium.

Key Points of Reading Assignment

Four key points from the reading assignments that were emphasized in the simulation were supply and demand, equilibrium, shifts in supply and demand, and price ceiling. The supply curve is upward sloping because the quantity supplied increases as the price increases; price and quantity supplied...