Supply and Demand Simulation

Supply and Demand Simulation

Atlantis is a great town to live in. There is especially a great opportunity in the rental real estate market and only one company to supply rental apartments. The key is to apply the laws of supply and demand to suit the needs of the business to be the most profitable.

Microeconomic and Macroeconomic Principles or Concepts

Scenarios one and three are microeconomic principles, they deal with the facet of economics that is about individual factors and the effects of individual decisions. In both scenarios, levels of vacancy are individual decisions and prices were adjusted to garner the wanted outcomes.

Macroeconomics studies the economy as a whole, as opposed to individual factors and decisions. Colander (2010) stated, “It considers the problems of inflation, unemployment, business cycles, and growth” (p. 15). The fourth and seventh scenarios are examples of macroeconomics.

In the fourth scenario, the population is expected to grow, because new business is moving to town. This will have an affect on the entire Atlantis economy. This will be, for example, because of the creation of new jobs, thus a drop in unemployment. Some areas will see new growth, such as new real estate development. There will be an influx of people as well, bringing more money to be spent in the local businesses. In response to this growth GoodLife’s apartment leases will go up because demand went up. As demand goes up prices go up. However, as shown in the seventh scenario, there were some families who were not able to meet the high rent prices.

Shifts in the supply and demand curves

The demand curve in scenario one, shifts down, as the rental rate goes down. As the vacancy rate goes down, more and more units are rented out. This action will handle a surplus which in turn leads to lower equilibrium prices.

The supply curve in scenario two shifts up as the rental