Supply and Demand Simulation Paper Christine Thompson University of Phoenix ECO365 What causes the changes in supply and demand in the simulation? An increase in population due to Lintech’s arrival caused an increase in income causing an increase in demand for detached homes which was the substitute to the two-bedroom apartments therefore causing the demand for those to decrease. With the decrease in demand for the two-bedroom apartments, supply also decreased since they decided to take a good chunk of them and convert them into condominiums and selling them.
When the government imposed rental control/price-ceiling the demand increased causing a shortage. How do shifts in supply and demand affect your decision making? When there was an increase in demand due to an increase in population, I defianetly knew that people would pay more than what the current monthly rent was so that helped me to decide on the rent increase. List four key points from the reading assignments that were emphasized in the simulation. . Law of supply and demand: Demand, the higher the price of a good the less amount consumers will demand and vice versa. This causes a downward slope on the demand curve. Supply, reveals the quantities that will be sold at a certain price, the higher the price the more quantity is supplied, causing an upward slope on the supply curve. b. Equilibrium concept: This occurs when the supply and demand for a good is equal. c.
Movements in the supply and demand curves: Movements occur when a change in the quantity demanded/quantity supplied is only caused by a change in price. d. Shifts: Shifts occur when the quantity demanded/quantity supplied is caused by a factor other than price. Such things as income increase and preferences. How can you apply what you learned about the concepts of supply and demand from the simulation to your workplace? I work in the housing department and it’s by job to find temporary housing for our summer sales program.
It has been an extremely challenging year trying to locate short term leases and anywhere between 15-20 apartments per area for our teams. I have seen the supply of apartments decrease probably due to the fact that many have lost their homes and are now renting. On the flip side, in areas that have the supply, the apartment complexes recognize the demand and are increasing the leasing terms available along with the monthly rental amounts. Determine how price elasticity affects the decision making of the consumer and of the organization.
Elasticity differs among products since some products are vital necessities to the consumer and are not considerate when it comes to price changes because the consumers will more than likely continue to purchase these items regardless of price increases. A good or service will become highly elastic if a small change in price causes a sharp change in the quantity supplied or demanded. These are usually products that are easily available but a person may not see that product as a necessity in their daily life.
If a business provides a service or a product that is highly elastic, reducing their prices would be advisable. Summarize your results of the assessment for your instructor. I had relatively consistent results; the first scenario was to get the vacancy rate down to 15% while maximizing revenue. I did charge the appropriate rental amount to drop the vacancy rate, but did not maximize revenue. The second scenario was determine the rental rate if all 2,500 units were leased out. I correctly identified the rate of $1,550.
Third scenario was to determine the monthly rental rate to remove an imbalance that was found during a survey. I correctly identified the rental rate of $1,050, which there was no imbalance between quantity demanded and quantity supplied. Fourth scenario addressed the arrival of Lintech, and how that would affect the demand and supply, and what rental rent would need to be charged to reestablish the equilibrium. I correctly identified the impact of increased population which demand increased, supply did not change and correctly determined the rental rate to be $1,400.
In the fifth scenario I was to determine how supply and demand would be affected after a recent housing survey indicated that detached homes were becoming more popular due to an increase in income than two-bedroom apartments and the rental rate in which to charge to reestablish the equilibrium between supply and demand. I correctly identified the impact, stating that demand decreased while the supply did not change and the rental amount I determined was $1,300. Sixth scenario implicated another decline in demand for two-bedroom apartments and how Goodlife has now decided to take a portion of those units and convert them into condominiums.
I correctly identified a decrease in demand and supply, with the appropriate rental amount at $1,475. The final scenario had a government imposed price ceiling and the effect it would have on demand and supply. I correctly identified an excess demand, and a shortage since the quantity supplied was 2,275. References Economics basics: elasticity. (n. d. ). Retrieved from http://www. investopedia. com/university/economics/economics4. asp Colander. D. C. (2008). Economics. New York, NY: McGraw-Hill/Irwin.