Supply and Demand Simulation

Essay by headhunchoUniversity, Bachelor'sA+, August 2009

download word file, 5 pages 3.0

University of Phoenix-Baton Rouge CampusThe small city, of Atlantis, with luscious green areas and playground, with access to highways, and adequate sidewalk and streets puts traffic to a minimum. Pollution is low in addition to, tree lined streets, and well-maintained sidewalks allow the residents to enjoy hobbies like walking, jogging, or biking. The open space offer territory for wildlife. The housing is composed of both detached homes and apartments. Atlantis is well maintained, in good conditions, alone with low crime rate with excellent infrastructure. I will attempt to explain the supply and demand of two bedroom rental apartments in Atlantis. In addition, explain the supply curve, and the demand curve as well as equilibrium. Through different scenarios, explaining what factors that affect demand and supply, and consequently the equilibrium.

I am the Property Manager, employed with Goodlife Management, which is a property management firm that is the only firm who manages seven apartment complexes in Atlantis.

Some might say we have a monopoly in this market. My responsibilities include receiving 30-day notices for upcoming vacancies, establishing new rental rates, and setting advertising schedules.

In scenario one, Goodlife has 2,000 two bedrooms apartment in the complexes. The current vacancy rate for those bedrooms is on a temporary, month-to-month lease, which is at 28%. My goal is to first drop the vacancy rate from 28% to 15% and maximize the revenue. I will attempt this by determining the monthly rental rate to ensure that more apartments are occupied and that revenue is maximized. Currently, the vacancy percent rate is 40.00%, the revenue is $1.56m, the surplus is 800, and the quantity demanded is 1,200 with a rental rate of $1,300. If I change the vacancy percent rate to 5.00%, and charge a rental rate of $950, the demand curve varies...