Supply and Demand Simulation

Supply and Demand Simulation

This paper focuses on the “Supply and Demand” simulation located on the student website. The simulation is based on a firm call Goodlife Management. The management firm is based all over the nation, but focuses on the Atlantis location. Goodlife management rents out two-bedroom apartments that are leased on a month to month basis. The scenarios pointed out at least four concepts within the simulation. The four concepts identified in the simulation were; supply and demand, equilibrium, shifts in supply and demand, and price ceiling. In this simulation, the concepts that deal with microeconomics are supplied and demand with equilibrium. The concepts that deal with macroeconomics are shifts in supply and demand with a price ceiling. Microeconomics is the studies the actions of organizations and people. Macroeconomics is the study of a government’s economy as a whole. Supply and demand, with equilibrium, ties in to microeconomics due to the concepts focusing on the management firm making their on decisions. Shifts in supply and demand with an added price ceiling is a part of macroeconomics because the government step in to add a price ceiling on the cost of rent to make renting affordable to the middle class.

The simulation had several shifts in the supply curve and the demand curve. In one scenario, the rental rate needed to be lowered to increase the demand curve and to decrease the supply curve. In one scenario, a new company opened operations in the city of Atlantis, which cause the population to increase. An increase in the city’s population caused the demand curve to increase with the two-bedroom apartments rented out by Goodlife management and the supply curve did not change. In the year five scenario, increased income caused consumers to prefer detached homes over apartment-style living. This caused the demand curve to decrease and cause no effect on the supply curve.

Both, supply and demand plays an important role in making decisions to set prices, determine the quantity of goods and services, and to determine the fate of a company’s financial health. The supply and demand curve needs to be the same to accomplish an equilibrium price. If the demand curve is lower than the supply curve, this causes a surplus. If the demand curve is higher than the supply curve, this causes a shortage. This is why companies need to analyze their market and make smart decisions on how much goods and services they need.

One product that