Supply And Demand Simulation Case Study
Supply and Demand Simulation
ECO/365
July 27, 2013
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In this case there were many examples of microeconomics, primarily the demand for two bedroom apartments and condominiums. The impacts and decisions that Goodlife made in response to the people’s demand is an example of microeconomics. Micro looks specifically on how a company can increase their profit to remain competitive in the market.
The changes in supply and demand when another company came into Atlantis and when the government issued a price cap for rent are example of Macroeconomics. Macro pertains to unemployment and government related issues.
The first shift that I experienced was the demand shift when changing the rental price per unit. While I lowered the rate of …show more content…
the rental until the revenue increased and reached the maximum quantity demanded and then the revenue began to decrease.
The second shift that I came across was the shift in the supply curve when all rental unit were leased out. This increased the profit made if all units were rented out because the price of maintenance went way down in comparison to the unit rented out. This supply curve is shifting upwards because the number supplied is increasing and the rental rate increases.
As I worked to get the supply and demand to meet I noticed that there was a point that the equilibrium started to move, if the rental price is greater than equilibrium the quantity supplied is greater than the quantity demanded. As I brought the rental price down so that the demand and supply curves met each other. A shortage on the rental units put pressure on the price to increase, a surplus on the supply drives the price down.
When equilibrium was met at $1,050.00 per month there is no shortage and no surplus in the rental unit demand.
The next scenario presented an increase in demand for monthly rental unit due to a new company moving into the area. I identified correctly that the demand increases, but failed to notice that the supply does not change. In the third scenario as the rental rate decreases there is a downward shift down the supply curve. The decreased both the rental rate and the equilibrium price. The next scenario presented that there was a decrease in demand for two bedroom apartments so Goodlife converted many apartments into condominiums. I was able to correctly identify that there was a decrease in demand and a decrease in supply of the two bedroom apartments. In this scenario both the demand and supply curve shifted to the …show more content…
left.
At my current workplace we constantly monitor the demand of education and the supply of it in our area.
In the past there was a large push for work at home jobs, specifically Medical Transcription. My workplace started a program and monitored it’s enrollment. For many years this was a thriving program, however with the changes in demand in the workplace and the increased supply/opportunity to take this course online the demand for this program declined. We were able to identify this and eliminate this program as the demand decreased. We can now offer similar programs but ones that have a higher demand for the specialty and less availability in the area; such as Medical Assistant and Radiology Assistant.
The basic concepts of microeconomics help me to identify how and why there are shifts that occur. It is important to not only know that shifts are happening, but why they are happening and what changes must be made to remain a competitive organization in the market. It is important to understand the equilibrium price as it pertains to demand and supply shifts to know how to competitively market the
product.
In this situation the price was very elastic because with a small change in the price the demand was driven down, when the price was decreased the demand was driven up. These changes required the firm to make changes that made them comparable to the competition in the market. There was an increase in the demand as people moved into the area, however it is still important to not price the rental units too high because there was a change in the demand for the type of product. A competitive firm must remain flexible in the prices that they are offering in such an elastic market.
References
University of Phoenix. (2013). Applying Supply and Demand Concepts. Economics for Business I. University of Phoenix.
ECO/365
July 27, 2013
*
In this case there were many examples of microeconomics, primarily the demand for two bedroom apartments and condominiums. The impacts and decisions that Goodlife made in response to the people’s demand is an example of microeconomics. Micro looks specifically on how a company can increase their profit to remain competitive in the market.
The changes in supply and demand when another company came into Atlantis and when the government issued a price cap for rent are example of Macroeconomics. Macro pertains to unemployment and government related issues.
The first shift that I experienced was the demand shift when changing the rental price per unit. While I lowered the rate of …show more content…
the rental until the revenue increased and reached the maximum quantity demanded and then the revenue began to decrease.
The second shift that I came across was the shift in the supply curve when all rental unit were leased out. This increased the profit made if all units were rented out because the price of maintenance went way down in comparison to the unit rented out. This supply curve is shifting upwards because the number supplied is increasing and the rental rate increases.
As I worked to get the supply and demand to meet I noticed that there was a point that the equilibrium started to move, if the rental price is greater than equilibrium the quantity supplied is greater than the quantity demanded. As I brought the rental price down so that the demand and supply curves met each other. A shortage on the rental units put pressure on the price to increase, a surplus on the supply drives the price down.
When equilibrium was met at $1,050.00 per month there is no shortage and no surplus in the rental unit demand.
The next scenario presented an increase in demand for monthly rental unit due to a new company moving into the area. I identified correctly that the demand increases, but failed to notice that the supply does not change. In the third scenario as the rental rate decreases there is a downward shift down the supply curve. The decreased both the rental rate and the equilibrium price. The next scenario presented that there was a decrease in demand for two bedroom apartments so Goodlife converted many apartments into condominiums. I was able to correctly identify that there was a decrease in demand and a decrease in supply of the two bedroom apartments. In this scenario both the demand and supply curve shifted to the …show more content…
left.
At my current workplace we constantly monitor the demand of education and the supply of it in our area.
In the past there was a large push for work at home jobs, specifically Medical Transcription. My workplace started a program and monitored it’s enrollment. For many years this was a thriving program, however with the changes in demand in the workplace and the increased supply/opportunity to take this course online the demand for this program declined. We were able to identify this and eliminate this program as the demand decreased. We can now offer similar programs but ones that have a higher demand for the specialty and less availability in the area; such as Medical Assistant and Radiology Assistant.
The basic concepts of microeconomics help me to identify how and why there are shifts that occur. It is important to not only know that shifts are happening, but why they are happening and what changes must be made to remain a competitive organization in the market. It is important to understand the equilibrium price as it pertains to demand and supply shifts to know how to competitively market the
product.
In this situation the price was very elastic because with a small change in the price the demand was driven down, when the price was decreased the demand was driven up. These changes required the firm to make changes that made them comparable to the competition in the market. There was an increase in the demand as people moved into the area, however it is still important to not price the rental units too high because there was a change in the demand for the type of product. A competitive firm must remain flexible in the prices that they are offering in such an elastic market.
References
University of Phoenix. (2013). Applying Supply and Demand Concepts. Economics for Business I. University of Phoenix.