Supply and Demand Simulation

Supply and Demand Simulation

Supply and demand is an essential part of economics, and the various factors involved are which that determine the price changes in a market. The supply and demand are influenced by the variations of a product that is either increasing or decreasing in its price. The stimulation used in week two exercise will take you through the supply and demand of two-bedroom rental apartments managed by GoodLife, in the city of Atlantis. The stimulation involves learning the factors that affect their demand and supply, and altering the prices based on changes in the economy throughout the years. It shows the changes that have occurred in the demand curve, the supply curve and equilibrium. It also showed the effects of how government laws for rent control would utilize a priced ceiling in order to hold prices down. In result, it is so that GoodLife can discover and forecast what the demand would be during this type of limitation.

During the stimulation, principles of microeconomics and macroeconomics were used in different scenarios, such a low rental rates, increase of population, and government laws. With these factors in mind, the interactions of supply and demand can cause either a shift on the curve or an imbalance. Decisions, such as determining the monthly rental rates for maximizing revenue and or on the quantity supplied apartments in the economy were made in order to have the equilibrium met. Each scenario varied in different economic factors, variables and expectations that are requested to meet the management goals. The scenarios included the differences between movements of the shift of the demand and supply curves, and how the equilibrium is re-established after the curves shift. By observing the supply and demand shifts, the previous data was used to determine the price of the rental rates or the quantity of apartments are rented out for a given month.

Microeconomics factors during the stimulation is analyzing the exchange between the supply and demand, so that prices and quantities are meeting its equilibrium. Also, how to maximize its profit by using the excess supply and decreasing its price. In particular, the individual factors that apply, such as region, patterns of supply and demand, determination of price and its affects in the market. Throughout the stimulation, it analyzed a specific city being Atlantis, the patterns of the supply and demand by, using past data, that involved a survey to determine how figure out the monthly rate in order to remove its imbalance.

Macroeconomic factors can play a role of causing supply and demand shifts to have larger effects on equilibrium price and quantity. Having price elasticity and price ceilings prevent using the highest prices to maximize if there was higher demand. Government’s regulation of the price ceiling is classified as macroeconomics simply because