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Macroeconomics and the Laws of Supply and Demand

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Microeconomics and the Laws of Supply and Demand
Nicholas Perry
ECO/365
May 26, 2014
Tarron Khemraj

Microeconomics and the Laws of Supply and Demand
In the Supply and Demand Concept Simulator, there were several microeconomic and macroeconomic principles covered. Also, there were shifts in the supply or demand curve throughout the simulator, and I will explain the shifts in greater detail.
To understand what microeconomic principles were used in the simulator, understanding what microeconomics means is important. Microeconomics is the study or analysis of the economy or market on an individual or business level. It focuses on individual buyers and sellers within businesses. One example from the simulator of microeconomics is when Susan asked me to decrease the vacancy rate to 15 percent. In order to do this, I must decrease the cost of the apartments to try and increase the demand or interest in vacant apartments. The reason this is microeconomics is because the decision a decision made on an individual level and has to do with the buyer and seller only to benefit my business. Susan later asked me to lease out all 2,500 available two-bedroom apartments available. In order to do this, Hal suggest we raise the monthly rental cost for the two bedroom apartments so we can cover the maintenance cost. We have to do this in order to stay profitable. This is microeconomics because again, it is focused around the buyer (renters) and the seller (GoodLife Management). The decision to raise the cost was made on an individual or business level in order to stay profitable, which classifies this shift as microeconomics.
Macroeconomics is the study or analysis of the economy as whole, to include but not limited to, changes in price levels, unemployment, and inflation. During the simulator, the government sets a price cap on two-bedroom apartments. This price cap...

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