Eco 365 - Microeconomics and the Laws of Supply and Demand

Microeconomics and the Laws of Supply and Demand

Shemeika Montgomery

ECO/365

March 28, 2016

Mr. Fleming

Microeconomics and the Laws of Supply and Demand

This paper will be summarizing the content of the stimulation/video and addressing several factors. The stimulation is about a small city in Atlantis that is beautiful and have very low crime rates which would be a joy to live. The housing in that city includes two- bedroom rental apartments and detached homes which are in good condition with great infrastructure. Two microeconomics principles will be identified from the stimulation, and it will be explained why these concepts have been categorized as microeconomics.  Identified will be one shift of the supply curve and one shift of the demand curve, and what causes the shifts, and how each shift affects the price, quantity, and decision making.

 Microeconomics and Principles or Concepts

        Microeconomics concepts and principles are used in the stimulation.  Microeconomics is the study of individual choice and apart of the economic that deals with single factors. (Economics, 9e, 2016). I chose to use supply and demand. Supply and demand is talked about in the stimulation dealing with the rental apartments in Atlantis. The property manager is required to receive 30-day notices for vacancies, establish new rental rates for the apartments, and create advertising schedules.  In the first scenario the property manager has to decrease the rent to lower vacancy by 15% from 28%, and that would maximize revenue for the firm. The property manager is required for determining the rate. When rental rate is reduced by the property manager more potential tenants are willing to rent which will cause a lower vacancy rate. Once the rental rate is reduced the revenue primarily goes up and reach a maximum at a particular rental rate and quantity demanded then decreases.

        Shifts of Supply Curve and Shift of Demand Curve

The simulation mentioned many different shifts of the supply and demand curve. Once Goodlife start managing over 3,000 apartments with two-bedroom. An increase in the population increases the demand for rented apartments. It does not affect the supply though because the amount of apartments demanded is more than the amount of apartments available to lease. When more people demands rented apartments at whatever rates given, there will be an increase in demand. This will cause the demand curve to shift to the right. Increase in demand simply means the quantity demanded is more than supplied. The supply curve shifts when the amount of apartments increase. The supply curve shift upward once the numbers of apartments increased.