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 its decisions of whether to rise or lower rent prices based on the areas economic factors. If the demand is not there to achieve zero vacancy or a low vacancy rate then the obvious solution is to lower the price to align with the microeconomics factor of supply and demand. As time progresses the company must be able to quickly and effectively react to the ever-changing economic conditions in order to run efficiently. Macroeconomic factors cause shifts in supply and demand that have adverse
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 its decisions of whether to rise or lower rent prices based on the areas economic factors. If the demand is not there to achieve zero vacancy or a low vacancy rate then the obvious solution is to lower the price to align with the microeconomics factor of supply and demand. As time progresses the company must be able to quickly and effectively react to the ever-changing economic conditions in order to run efficiently. Macroeconomic factors cause shifts in supply and demand that have adverse