Supply and Demand Simulation Evaluation

Essay by pinchetteUniversity, Bachelor'sA+, July 2006

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The simulation titled "Applying Supply and Demand Concepts" was an exercise in evaluating the way that supply and demand affect each other and change the curve and direction of the slope while keeping balance or equilibrium. The task was to complete the scenarios and evaluate how the changes in the demand and supply changed the way the company did business. The final task was to find a way that this information can be of use in my place of work.

Supply and Demand Simulation


In the simulation "Applying Supply and Demand Concepts" the regional property manager, Hal Morgan of Good Life Management, wants to increase the demand for their two-bedroom temporary month-to-month rental rates in Atlantis. The supply and demand shifts during the seven year period used in the simulation. I will be discussing the changes that occur and how that will affect the balance in the supply and demand curves.

Scenario One

There are several changes in the supply and demand shown and causes for each. In the first year the rental rate must be reduced to increase the demand even though Good life Management holds a monopoly in this area. To do this we need to lower the rental rate to $1050.00 a month. This brings the occupancy rate down from 28 % to 15% and income will be at 1.79 million dollars. The apartments demanded now rises to 1700 as the price of the two-bedroom apartment's fall to the rate of $1050.00 with a surplus of 300.

Scenario Two

Scenario two has Hal Morgan of Good Life Management wanting to increase the current rental rate from $1100.00 to $1550.00 a month. At the current rental rate it is not profitable to rent out all apartments with the maintenance costs that will accrue. To lease...