The University of Phoenix Applying Supply and Demand Concepts Simulation (University of Phoenix, 2009) demonstrated the mechanics of how supply and demand operates in today's market. The simulation used the housing market to show different scenarios and how demand and supply worked in these scenarios. This paper will discuss the simulation and how different environmental factors affect supply and demand and how this affects decision making. Four key points of the simulation will be discussed along with how the concepts can be used in a hospital food service environment. Price elasticity of demand and how it affects consumer decision-making will be looked at along with a summary of the entire simulation.
Scenario OneThe simulation portrayed GoodLife as a property management company who employed the user as a property manager. Different scenarios were provided to the user in which the user had to use decision-making skills to make the correct decision.
The illustration that accompanied Marshall's origi...
Perfectly inelastic demand
Perfectly elastic demandThe changes to the supply and demand were caused by several factors in the different scenarios. The factor in scenario one was the regional property manager, Hal, requested the property manager to bring down the vacancy rate from 28% to 15% and maximize the revenue. For the property manager to decrease the vacancy rate, prices needed to be lowered. This upholds the law of demand which states the higher price of a product, the less demand for the product. The rental rate of the apartments was reduced to $1050 which reduced the vacancy rate to 15 %. The revenue increased from 1.56 to 1.49 % and although the revenue increased initially, the revenue will hit a peak and decrease. The apartments quantity demanded went from 1200 to 1700 while the surplus decreased from 800 to 300.
Scenario TwoThe change in scenario two that affected the supply and demand was Susan's...