Supply and demand simulation

Essay by btterfly18University, Bachelor'sA, October 2007

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The purpose of the supply and demand simulation was to help the class have a better comprehension of how supply and demand affects the market, particularly the housing market. This simulation familiarized the user by providing examples and real life situations on the supply and demand curves, price ceiling, and equilibrium. During this simulation, the user takes the role of a property manager for Goodlife Management, located in Atlantis. Goodlife Management owns and manages seven apartment complexes. It is the responsibility of the property manager to control rental rates and the apartments that are available in Atlantis.

In the first year as the property manager of the Goodlife apartments in Atlantis it was requested to decrease the vacancy rate to 15%. By decreasing the vacancy rate, the rental rate per month also decreased. These changed increased the demand for apartments. The next step in the simulation was to lease out more apartments.

By doing so, the rental rate needed to be increased to $1550.00 per month to be able to provide for acceptable maintenance fees which were increased. The third step in the simulation was to find a solution to the imbalance between the quantity supplied and the quantity demanded. In order to achieve a balance, the rental rate was lowered to $1050.00, which did not cause the rates of the available apartments to change.

After being the property manager for two years, Lintech, Inc, a new company started its business in the town of Atlantis. This brought many changes to the local area such as the demand of apartments and jobs, because of the increase in population. These changes brought on unevenness in supply and demand within the area. The demand for apartments was high when Lintech moved in, but the supply was not available. After two more...