Supply and Demand Simulation

Essay by SintheeaUniversity, Bachelor'sA+, June 2006

download word file, 3 pages 4.5

The purpose of this paper is to answer questions pertaining to applying supply and demand concepts presented in the week two simulation (University of Phoenix, 2004). The simulation provides a scenario in which the property management firm, GoodLife Management, experiences varying demand and supply situations due to population and personal preference changes.

1. What causes the changes in supply and demand in the simulation?

Initially, in an attempt to drive up the rental rate, GoodLife Management withholds a portion of available apartments creating an environment of scarcity. There is also a decline in apartment demand as there is a shift in individual preference to detached housing. To accommodate and capture these consumers, GoodLife Management converts a portion of existing apartments into condominiums again creating a scarcity of apartments. However, as new businesses arrive in Atlantis and there is a decrease in availability due to apartment-to-condominium conversion, the demand exceeds the supply.

An additional factor affecting consumer demand for apartments is attributable to lower available housing in neighboring towns.

2. How do shifts in supply and demand affect your decision-making?

Any affects would depend on immediate need and considerations in the decision-making process. Presently, because of fluctuating gas prices, purchasing gasoline before weekends and holidays tends to save a few pennies at the gas pumps. The increase in the price of fuel may not be because of decreases in available resources, but rather the greed of the suppliers. Gas companies currently have a monopoly on the market, as alternative fuels are not fully competitive, which means consumers as a whole, pay what the supplier demands. For those activities requiring consideration for gas prices, such as unnecessary travel, there may be a decline. In the consideration of larger or luxury purchases, it may be more prudent to wait for prices...