Eco 365 - Microeconomics and the Law of Supply and Demand

Microeconomics and the Law of Supply and Demand

ECO/365

April 11, 2016

Microeconomics and the Laws of Supply and Demand

The concepts of microeconomics and macroeconomics pertain to the supply and demand. Supply and demand affect every aspect of living. A change in supply or demand will shift the curve towards price and quantity. Knowing the difference between supply and demand and how they differ with microeconomics and macroeconomics will explain the basic of equilibrium.

Principles: Microeconomics

The simulation offered a couple of microeconomics and macroeconomics principles. Microeconomics examples that was shown consists of government intervention and supply and demand. The government intervenes in light of realizing that a lot of the city workers lived in the county instead of the town due to the two bedroom apartments prices costing too much. The government set the apartment prices at 1500 which is called price ceiling. Price ceiling “explicitly alter the population and each subsequent generation from which firms select their prices” (Mccarthy, 2009, p. 2). Supply and demand go hand in hand. Supply displayed how GoodLife Management was able to maneuver the amount of lodging available for rent when the need was there. The need for every open apartment happened when Lintech, Inc. moved into the city. The demand in this exhibit resembles proof of a particular type of demand, quantity demand. Quantity demanded is “a specific amount that will be demanded per unit of time at a specific price, other things constant” (Colander, 2013, p. 79). Quantity demanded was provided in year 7 for January and July. It showed what some apartments market was and the rate. In the month of January, the demand was for 2250 apartments, and the rate was for $1300. The month of July, the demand was 1900 apartments and $1475. Government and supply and demand was categorized as microeconomics because it showed how demand and supplies were affected once the government got involved at a local level.

Principles: Macroeconomics

Macroeconomics examples of economic growth and the business cycle. Economic growth in the simulation was presented when the Lintech, Inc. moved to town. The new company created new jobs for current citizens, brought more money to the town to be spent, and made the demands for supplies increase. The demands for supplies increase consists of housing, which cause the GoodLife Management to increase the prices of the two bedroom apartments because the supply was limited. The business cycle was expressed with the ascending and descending flow of the rentals. For example, when the Lintech, Inc.