Premium Essay

Microeconomics and the Law of Supply and Demand

In: Business and Management

Submitted By Rizza32
Words 916
Pages 4
Supply and Demand Simulation
July 22, 2014
Nathan Haggard
ECO 365

There are a variety of factors that can influence changes in supply and demand. These factors include price increases or decreases. An example is a nominal decrease in an asking rental price can result in a substantial increase in demand for houses. To a similar effect, an increase in the rental price of two-roomed apartments consequentially resulted in a decrease in the demand of houses by a substantial amount. Suppliers were willing to supply more houses at higher prices and fewer ones at reduced rents.
A rise in the population of Atlantis led to a higher demand for housing and was the reason for the rise in rental prices. This occurs when the demand for a product or commodity exceeds the available supply. Because of this, suppliers were eager to construct more units at improved (increased) rental rates. When the population decreased, the demand for housing fell and the available units were leased out at low prices. The suppliers were not happy to supply all their units to the market at lower prices.
Available substitutes can also affect the demand and supply of a commodity. A number of people residing in Atlantis had owned homes in the suburbs, and renting houses within the town was not necessary. The demand for houses dropped, forcing the landowners to cut back on supply or reduce rents. To try and attract more clients in an effort to increase capital, the pricing can fluctuate either way. Consumer preferences affect the supply and demand of goods and services in the market. When consumer trends shifted from smaller two-roomed apartments to larger detached-style houses, the demand for apartments diminished and the demand for detached houses rose. Suppliers increased the construction of detached-style houses to accommodate the needs of potential consumers.
Under free market...

Similar Documents

Premium Essay

Microeconomic and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand Eco 365 Instructed by: The purpose of this paper is to review and discuss how the principles of both macroeconomics and microeconomics are pertinent to many aspects of our daily lives in ways that a mass majority of individuals has never stopped to think about. The discussion herein is based on a simulation involving rental apartments in Atlantis that are all owned by the same company known as Goodlife. It is important to anyone individual or company in their growth to know when to know what a good price is, when to spend money, when to save money, and what to do in between, and to do so you must understand the concept of supply and demand and how to utilize the information. Most people understand the basic aspects of this; however, to be effective one must know the importance of how both macro and microeconomics are to our ways of living. Further at it relates to the simulation, discussions in this paper will consist of identifying both a supply and demand curve and explain what happens when a shift takes place as well as their different areas of impact. Lastly, I will discuss price elasticity and how a persons spending. Macro and Microeconomic Principles Here is a quick review of two important terms and definitions. Pursuant to Colander (2013), “Macroeconomics is the study of the economy as a while” and “Microeconomics is the study of how individual choices are influenced by economic......

Words: 945 - Pages: 4

Premium Essay

Microeconomics and the Law of Supply and Demand

...ECO365 November 24, 2014 Microeconomics and the Law of Supply and Demand The Supply and Demand simulation concept is essential to understand the effects of pricing and availability to consumers on real world commodities. This simulation captures the impact of different scenarios and situation of the property management company, Goodlife Management in the city of Atlantis. In the scenarios and based on the situations that occurred, these factors influences the equilibrium such as adjusting the rental rate of the apartments to maximize revenue. An attempt to increase the price to ensure a sufficient number of apartments to be rented to satisfy the demands, and making modification to the firm's trend from rental apartments to homeownership in order to meet the needs of a growing population due to Lintech Inc (University of Phoenix, 2014). Macroeconomics VS. Microeconomics In the simulation, the concepts of both, study of Microeconomics and Macroeconomics, are examined. Macroeconomics focuses on factors that affect the economy as a whole (Colander, 2013). In the scenario where Lintech company was introduced, the changes led to the whole economy of the city of Atlantis, not just the financial situation of Goodlife Management firm. The firm perceived the increase of residential demands due to the company workers that relocated in the area. However, in the scenario, when the firm increased the rental price due to the foreseen increase of demand of more apartments need to......

Words: 688 - Pages: 3

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand ECO/365 October 15, 2014 University of Phoenix Microeconomics and the Laws of Supply and Demand This assignment calls for the students to complete the Supply and Demand web simulation. The simulation is about a property management firm called Goodlife Management, who owns apartment complexes in the city of Atlantis. The simulation provides a number of different scenarios both covering information that we learned about microeconomics and macroeconomics. Identify two microeconomics and two macroeconomics principles or concepts from the simulation. Explain why you have categorized these principles or concepts as microeconomics or macroeconomics. Microeconomics affects the immediate supply and demand of the company. In the first scenario, GoodLife has 2,000 apartments in its apartment complexes, with a 28% vacancy rate. Susan recommends reducing the rate to 15% while maximizing revenue. We achieved this goal by reducing the rental rate, getting more occupants to move in the apartments, which maximized our revenue. The next scenario, GoodLife has 2,500 apartments available on a temporary month-to-month basis at the rate of $1,100. Susan suggests that we lease out all 2,500 apartments. Though possible to lease all apartments, we are unable to do so at the current rental rate due to the fact that maintenance cost will rise as the tenant and apartment rate rise. So, we raised the rental rate to $1,550 to compensate......

Words: 786 - Pages: 4

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand Your NAME ECO/365 July 6, 2015 INSTRUCTOR NAME Microeconomics and the Laws of Supply and Demand The simulation showed how a shift in the supply curve or the demand curve can lead to significant changes to the economic standing of the business. When the demand curve shifts downward or to the left it showed a decrease in demand from renters thus yielding less apartments rented. This happened when the new company who moved into the area had a higher focus in ownership rather than renting, this forced the management company to have to lower prices to compensate for the decrease in demand. This shift cause the equilibrium price to be reduced due to the lower demand, however supply and quantity remained constant. Supply and Demand Curve Shifts When the supply curve shifts up or to the right it indicates an increase in the number of apartments available for rent. This situation occurs when the management company expanded its buildings to make room for more units. If we assumed that the demand remained, the thing to do would be to lower the rental costs to increase occupancy, this was done twice during the simulation once when Susan suggested that vacancy rate be lowered to 15% and once again when she suggested it be lowered to zero. This could have led to increase in profits should there have been sufficient demand to achieve full occupancy rate for all the apartments being provided. The management company must base......

Words: 815 - Pages: 4

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand To purchase this visit here: http://mindsblow.us/question_des/MicroeconomicsandtheLawsofSupplyandDemand/2779 Contact us at: help@mindblows.us Complete one of the following options: Option 1: Complete the Supply and Demand Simulation. Write a 1,050- to 1,400-word paper summarizing the content of the simulation and address the following: Identify two microeconomics and two macroeconomics principles or concepts from the simulation/video. Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics. Identify at least one shift of the supply curve and one shift of the demand curve in the simulation/video. Explain what causes the shifts, and how each shift affects the price, quantity, and decision making. Include responses to the following: How might you apply what you learned about supply and demand from the simulation/video to your workplace or your understanding of a real-world product with which you are familiar? How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on equilibrium price and quantity? How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? How does the price elasticity of demand affect a consumer's purchasing and the firm's pricing strategy as it relates to the simulation/video? Cite a minimum of 3 peer...

Words: 936 - Pages: 4

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand In this paper we will be discussing the law of supply and demand. First of all, what is demand curve? Demand curve is the graphical representation of demand that shows the quantities consumers are able and willing to buy at various prices. A normal demand curve is downward sloping in accordance with the law of demand. Supply curve is also a graphical representation of supply that shows the quantities producers are able and willing to sell at various prices. A normal supply curve is upward sloping in accordance with the law of supply. Equilibrium is a state of balance where dynamic forces have canceled each other out and there is no tendency for change. The laws of supply and demand are the ones that determine our economy today. During the simulation it showed that the numbers affect dramatically towards the economy. “ For example, if the demand curve shifted to the left, it would show a decrease in demand from consumers and cause fewer apartments to be filled.” (Supply and demand Simulation, Linda R, July 21,2014) In this situation what happened is that due to a widespread desire of having property ownership and been forced from the management company to lower their prices for them to compensate. Equilibrium price becomes lower because the demand decreased, while the supply and the quantity remained the same. “If the supply curve were to shift to the right, it would indicate an increase in available apartments rent.”......

Words: 748 - Pages: 3

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand Heather Prince ECO/365 February 16, 2015 Paul Palley Microeconomics and the Laws of Supply and Demand During this week’s homework, we completed a simulation regarding supply and demand. In this simulation, we learned how to change the rent amount on apartments to effectively earn profits during different situations. This helped us to learn how we would handle different situations that can arise when owning a rental company. This simulation showed scenarios related to microeconomics and macroeconomics. The two microeconomic situations that I came across in this simulation were when the company Lintech, Inc moved to Atlantis and when Lintech, Inc.’s employees incomes increased. I determined that these situations were related to microeconomics because they were changes in how the consumers and producers needs and wants. In both these situations, it was how the economy for that particular place was affected. The macroeconomic situation that I came across in this simulation was when the government imposed a price ceiling of $1,550. I determined this to be a macroeconomic situation because it was an effect on the economy because of a federal government change. The federal government imposed the price ceiling and it was not directly from the consumer or producers changes. A shift in the supply curve happens when the quantity supplied is increased as the price increases. In the scenario, this......

Words: 741 - Pages: 3

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand The first microeconomic policy that I noticed in this simulation, was the company GoodLife's decision to try and reduce their rental vacancy rate while still increasing the revenue. This is a microeconomic concept because it focuses solely on the company's revenue and profit and does not take a look at how this will affect the bigger picture. By decreasing the price of rent at their apartments, they are increasing the quantity of rooms demanded. This in turn increases revenue because less apartments are empty. Another example of a microeconomic concept that is demonstrated in this simulation can be shown by GoodLife's decision to try and rent out all of their rooms. When they do this they actually have to increase the price of rent. The reasoning for this is because the more rooms that are rented out the more maintenance the company has to keep up. This is a good example showing that as you increase the price of the apartments, the number of apartments supplied to prospective clients also increases. A macroeconomic concept can be seen when the city of Atlantis begins to change and many more new companies move into the town. With the rise of the population, the city is beginning to notice more congestion in the town and a lack of housing. This is a macroeconomic concept because it the lack of housing is affecting the entire town's economics. The city also has plans on regulating the price of rent which can make it......

Words: 887 - Pages: 4

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand Terry Cerami ECO/365 September 21, 2015 David Flesh Microeconomics and the Laws of Supply and Demand Utilizing the supply and demand simulation ("University Of Phoenix", 2014), I will illustrate two macroeconomic and two microeconomic principles demonstrated in the simulation and expound on why these principles are categorized as microeconomic or macroeconomic. Also, one shift of the demand curve and one shift of the supply curve from the simulation will be identified with explanations for the shifts. Further, I will analyze the influence on decision making in correlation with quantity and the equilibrium of price and how these concepts of demand and supply can be pragmatic in everyday business or within the current work environment. Finally, I will explain how price elasticity of demand has an immense impact on products pricing strategy and its purchase from the consumer. Macroeconomic and Microeconomic Principles The first macroeconomic principle demonstrated within the Supply and demand Simulation is Price Ceilings. Price Ceilings ensue through legislation as laws are enacted establishing a lawful ceiling of how high the cost of a product can be ("Price Ceilings", n.d.). When a price ceiling is established, there is further demand than what is available at the equilibrium price. This is a result of there being a sufficient supply in quantity of demand than supplied quantity. For example, in the simulation......

Words: 1134 - Pages: 5

Premium Essay

Microeconomics and the Laws of Supply and Demand

...Microeconomics and the Laws of Supply and Demand K. G. ECO/365 April 7, 2015 Marcia Wojsko Microeconomics and the Laws of Supply and Demand This essay is based on the University of Phoenix simulation “Supply and Demand” located in the classroom-week 2 activities I completed. It was about the microeconomic concepts of the supply and demand curves that change based on different macroeconomic factors that affect the apartment rental industry. Two microeconomic concepts in this simulation were the supply and demand of two-bedroom rental apartments in Atlantis because these are based on decisions made by the individual consumer or rental agency. The simulation showed shifts to the supply and demand curves caused significant changes to the economic environment. “The demand curve is downward sloping, and that quantity demanded increases as the price decreases - that is, as you move down the demand curve” (University of Phoenix, 2015). “The supply curve is upward sloping, and quantity supplied increases with an increase in price – that is, as you move up the curve” (University of Phoenix, 2015). The macroeconomic factors in this simulation are what causes the shifts, beyond any one entity’s choice. In this simulation, it showed different scenarios of increased population and changes in consumer income. When the population increases, the demand curve moves to the right because of increased need of two-bedroom apartments. This does not shift the supply curve because there......

Words: 982 - Pages: 4

Premium Essay

Microeconomics and the Laws of Supply Demand

...Microeconomics and the laws of supply demand ECO/365 Supply and Demand Simulation Since the early years of commerce, supply and demand have been a huge factor in the capitalist business system. For this assignment I was asked to take part in a simulation as a source for my paper. In the simulation I had to take part of a series of important financial decisions for a fictitious apartment management company named GoodLife and see how each decision would be impacted by different economic factors. In this simulation, I was able to see that the microeconomics concepts could be labeled in the changes of supply and demand as well as the equilibrium in the apartment market. That is because the factors would only affect a small part of the apartment market in which the company on this scenario operates. The macroeconomics concept could be labeled with the price elasticity and the price ceiling. This is because it has a broad impact bigger than the local apartment market. The simulation taught me that any shift on the supply curve or demand can impact significantly the economics status of a company. For example, if the demand curve shifts to the left, it will show me that there is a decrease in the demand of people looking for apartments and in turn will cause that less apartments be rented. When this happens it forces GoodLife to reduce their prices to make up for the income gap. This means that the equilibrium price is lower because the demand decreased even though......

Words: 574 - Pages: 3

Free Essay

Microeconomics and the Laws of Supply and Demand

...Stages of the Research Process Enoc Colon RES/351 09-10-2015 MAJA ZELIHIC Stages of the Research Process It is important to identify the purpose of any business research. There are many strategies that an individual can follow if there were to be a project or business related issue that needed to be solved. Some may vary than others depending on the situation that needs to be resolved. The two articles that were chosen to practice identifying the critical first stage of developing a research study are Fake drugs and Bedbugs and Infectious diseases. Both articles were interested to read and they were also a challenge to identify the critical first stage of developing. The purpose of the business research for article, Bedbugs and Infectious diseases is to help the American citizens become more aware about their surroundings for infectious diseases or infectious diseases carriers such as bedbugs. Infectious diseases are not only in public but at home as well. Bedbugs can carry infectious diseases that can hospitalize an individual if not carful. An individual and their family will most likely not be as careful at home, as if they were to be in public. Little do people know that one of the most dangerous infectious diseases could be right in their own very home underneath their bed sheets? There are two cosmopolite bedbug species called Cimex Lectularius and Cimex Hemipterus. Both of the species feed off domestic animals and humans. There has been......

Words: 977 - Pages: 4

Premium Essay

Supply and Demand

...Microeconomics and the Laws of Supply and Demand Anthony Sanders ECO/365 June 29, 2015 Ronald Merchant Microeconomics and the Laws of Supply and Demand For the Supply and Demand Simulation, is about the apartment complex Goodlife in Atlantis, which is the only company that rents out apartments. The purpose of the simulation is to examine two microeconomics and macroeconomics concepts, determine how shifts in the supply and demand curve effects equilibrium, decision making, quantity supplied, and prices the apartments being rented. To begin, an example of two microeconomic concepts is the Law of Supply and Demand because these laws examine the behavior of individuals and how they allocate their resources. For the Law of Supply, the higher the price of a good will increase the amount supplied because suppliers want to make as much revenue. However, the opposite happens if the price of a good decreases. When the price goes down, suppliers do not make as much money on each service or good sold so the quantity supplied decreases. This is what happened when the rental ceiling was enforced at the rate of $1550. Supply of apartments decreased to 2275, leaving a shortage of 875. The second concept is the Law of Demand, which states that the lower the price is, the higher quantity demanded. The two macroeconomic concepts are price elasticity and price ceilings because it deals with the behavior and decision-making for the overall economy. Price......

Words: 826 - Pages: 4

Premium Essay

Definitions Paper

...for. Of course we all want more that can be produced, which causes a scarcity of the products. Microeconomics What is microeconomics? “Microeconomics is the study of individual choice, and how that choice is influenced by economic forces (Colander, page 15)”. In other words, it is the study of how companies’ price their merchandise, whether or not I should buy something, what resources are going to be needed. Opportunity cost is associated with microeconomics, and is the benefit that you can get if you choose an alternative. For example, if I spend all my time on homework then I will have less time to watch television. The invisible hand theorem is also associated with microeconomics, through price mechanism. Basically, when quantity supplied or demanded is greater than what is available, the prices will rise or fall. Law of Supply What is the law of supply? “The law of supply is based on substitution and the expectation of profits (Colander, page 90)”. Supply is the mirror image of demand, and we need demand in order to have supply. A good example of the law of supply was in the book, but I’ll put it a little differently. Say I am a an accounting assistant and I am supplying my labor to my company, who is in demand for my knowledge. The company provides me with the tools necessary to do my job (computer, printer, etc.) for production, which then supplies our...

Words: 619 - Pages: 3

Premium Essay

Macroeconomics and the Laws of Supply and Demand

...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). ......

Words: 857 - Pages: 4