Microeconomics and the Law of Supply and Demand

Microeconomics and the Laws of Supply and Demand

Tamara Channel

ECO/365

September 14, 2015

John Ilokwu

Microeconomics and the Laws of Supply and Demand

        Microeconomics and macroeconomics are applicable to various facets in people’s day to day lives. The company, Goodlife, owns several rental apartments in Atlantis. The Supply Demand Simulation and the Khan Academy Video “Changes in Market Equilibrium” discussed the effects on supply and demand curves due to the macroeconomic factors which will impact the industry of apartment rentals.  Both views identified the quantity demanded and quantity supplied and if there is going to be some sort of shortage or surplus. They also identified when to spend or save money and how to use the information to determine if there is a shift in demand or supply or adjustment in the equilibrium amount.

Microeconomics and Macroeconomics Principles

         “Microeconomics is the study of a person’s choice and how that same choice impacted by the forces of the economy. This study includes firms pricing policies, decisions of a household purchases, as well as how the markets distributes resources among alternative ends (Colander, 2013). Goodlife was described to be the only apartment rental company in Atlantis, hence no competition. This means that Goodlife could basically name the price market. In the readings, Colander (2013) states, “a monopoly is a market structure in which one firm makes up the entire market.”  Goodlife is a monopoly or a principle of microeconomics. Principle of income is another principle and is essential for the company to design a plan route that will be beneficial to income increases and for the vacancy rate to be decreased. The simulation displayed that the situations were effective and useful in that the apartment rental rates were impacted by reaching the maximum revenue. These rental rates included all charges related to the maintenance on each unit. Based on Goodlife’s economic burdens, the National Property Manager decisions were contrary to the inspiration of other companies or the government (Economics for Business, 2014). These were the principles that were chosen by the company.

Macroeconomics is the study of the economy as a whole and focuses on the problems of inflation, unemployment, business cycles, and growth (Colander, 2013). It also focuses on how household consumption is related to income and the government policies that can affect growth (Colander, 2013). The high rising city was described as having low crime rate, traffic was reduced and population was considered to be small which brings focus to the city as a whole which allows consumers to look at these principles to determine if the establishment was indeed somewhere that was favorable to live and rent. Goodlife owned thousands of two bedroom apartments that the company used to provide increase their profits and decrease the number of vacant rental apartments. This allows Goodlife to reduce their rental rates and increase the demand for consumers to want to rent or even buy their apartments.