In this simulation, the learner uses supply and demand curves to determine the equilibrium in the market for two-bedroom apartments on lease.
Supply and demand are the root concepts of economic analysis since economics is basically concerned with a result and how the result is achieved. The quantities of goods or services demanded satisfy the requirement for the ends. These concepts are relative and are interchangeable. Demand and supply are opposing concepts, in that demand is an inverse or falling function of the price while supply is a direct or rising function (Pink Monkey, n.d.). While both supply and demand are important functions, it is necessary to establish equilibrium between them. This would mean reaching a place where there is an equal point or agreement between the consumer and the producers. This can only be attained when the quantities demanded (QD) and the quantities supplied (QS) are at an equal point, when there is no competition between buy and sell.
English: Diagram illustrating the "aggregate suppl...
English: Supply and demand market curves
English: supply demand 1Changes in supply and demand can cause the QD and QS to be constantly battling to find that equilibrium. In the simulation, the changes were caused by factors both internal and external to Goodlife Management Company. The location of the properties was a selling point to the consumer, enticing the consumer to rent a unit because of where it was located. The property manager took advantage of this factor and was able to increase the profits by renting a good percentage of the units at a high rate. The company held a monopoly on the apartment rental market in the area so competition was not a factor. As the rates got higher, more potential consumers found alternate accommodations, increasing the competition factor. When new companies came into town increasing the potential consumer market (demand), the apartments were able...