Microeconomics and Macroeconomics Concepts

This assignment called for me to complete the supply and demand simulation activity, based on a town called Atlantis where Goodlife Management is located. The local company owned 2-bedroom apartment complexes in the city. Through this simulation numerous scenarios were provided to show how the effects of supply and demand works in both microeconomics and macroeconomics. It’s important to have a clear understanding as to what these two terms mean before moving on. Microeconomics studies individual’s behavior on how and what they plan on spending their money on. How the consumer decides to spend their earnings has a great effect on the supply and demand of goods and services and what the prices of those items will be. Macroeconomics deals with the economy on a much larger scale in areas such as inflation, unemployment and economic growth. Macroeconomics looks at factors and trends that can affect the economy as a whole.

Microeconomics and Macroeconomics Concepts

Having watched the simulation I found that the two microeconomics concepts that where presented were the supply and demand of the apartments. I say that because the supply and demand was affecting when the rent cost was decreased and lower the vacancy percentage. Also changes in the preference from the two bedroom apartment reduced the demand although the supply was still there. As the new company Lintech Inc. moved in both the population and need for housing had increased. The macroeconomics concepts in the simulation could be the price elasticity and price ceiling both concepts can have an overall impact on the apartment market. When the government came in and put a ceiling on the monthly cost for a two bedroom apartment, making housing affordable for everyone. This was done because the video stated that people were moving into the other neighborhoods because rent was cheaper. “When a price ceiling is set it becomes a great benefit to keeping the cost of living affordable during high inflation, usually during those times prices are increasing fast than the consumer’s income.” (Chron). It was important for the price ceiling to be put into place because many families where looking to rent homes else due to the rising price.

Shift in Supply and Demand Curve

In the video the supply curved shifted to the right when Lintech Inc. moved to Atlantis, this happened because the population of the city has now grown. When rental rates increases the demand will decease causing the supply to increase. Therefor leading to a shortage until the equilibrium is reached with the new and old demand and supply curve. According to Chron, “There can be a shift in demand when the availability of alternative products or changes in consumer preference, unemployment levels and interest rates.” In the simulation the shift occurred upon the arrival of Lintech Inc. and the population and demand increased,