supply and demand simulation

Essay by tracymcUniversity, Bachelor'sA+, October 2014

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Supply and Demand Simulation

Tracy Coutee

ECO 365

September 29, 2014

Christopher Rakovalis



Supply and Demand Simulation

Supply and demand play a crucial role in both macroeconomic and microeconomic settings. The week two simulation of GoodLife, a fictional apartment management company in Atlantis, demonstrated the impact of various economic factors. Changes in supply and demand, as well as equilibrium, are microeconomic concepts that impacted the way the company operated its small apartment market. Price elasticity and price ceilings are macroeconomic concepts that impacted the apartment market in that region.

The simulation demonstrated how a shift in the supply or demand curve could contribute to significant changes to the economic environment. For example, if the demand curve shifted to the left, this would show a decrease in demand from consumers that in turn caused fewer apartments to be leased.

In the simulation, due to a widespread desire for property ownership, the management company had to lower prices to compensate. The equilibrium price became lower because demand decreased while supply and quantity remained consistent. If the supply curve were to shift to the right, it would indicate an increase in available apartments to lease. This could have occurred if the management company had expanded the building to accommodate more units. Considering there was no change in demand, the solution would have been to lower prices to achieve full occupancy. However, if there were sufficient demand for the supply, profit could be maximized.

GoodLife has to consider economic factors when making their business decisions to ensure their price and supply quantities are within realistic economic boundaries. The obvious solution if the apartments were not being leased in...