Supply And Demand Simulation: Rental Company

Supply and Demand Simulation
ECO/365
March 10, 2014
Ed Hartmann, D.B.A
Supply and Demand Simulation
Microeconomics and Macroeconomics
In the simulation the supply and demand was affected due to the decreasing of the rent in order to lower the vacancy percentage and increase the revenue for the rental company. This is thought of as a temporary fix on a month to month lease basis and provides us with a good example of what microeconomics is. When a new company decided to move into town and increase the population as well as increase the number of jobs provides us with another good example of microeconomics. Because the population increased and the jobs increased means the rental rates are increased as well in order to respond to
the increase in demand.
The simulation also showed that people who were working in Atlantis were living in cities outside of town because the rent was less there, this is an example of macroeconomics.
The government decided to take control of the situation by putting a ceiling of $1550 per month for a 2 bedroom apartment in order for middle class families to be able to afford to live within the city that they work in which is another example of macroeconomics. Because of the ceiling being put on the rental properties it caused the rental company to only rent a portion of their apartments so that they would be able to make some sort of profit because of the cost of maintenance.
Shift of Supply and Demand Curve
The simulation showed us that when the new company moved into town increasing the population the supply curve shifted down because the supply of the two-bedroom apartments ended up decreasing. Because the population grew within the town the demand curve increased.
Analyzing the
Shift
When the increase in demand occurs this means that the quantity demand is larger than the quantity supplied from the initial equilibrium, which also means that there is a temporary shortage in the market. When the company increased the rental rate due to the demand increasing, the quantity demand decreased and the quantity supplied increased, in return there was a reduction shortage that occurred. The company will have to continue to make adjustments until the equilibrium is met between the new demand curve and the initial supply curve. When the company reached a new equilibrium, the rental rate was higher than it was before, and therefore the number of apartments that were demanded and supplied were increased (University of Phoenix, 2003).
Applying What We Learned In Our Workplace
Supply and demand in my workplace is based on our customers and what they require.
One of our biggest customers is the government mainly the military. For our company when our country is not at war or protecting another country then the demand for our product is low. The demand for our products helps other areas such as law enforcement but the government holds most of the demand of product. When the demand is low our company will need to reduce our headcount in order to stay on top of the game.
Conclusion
In microeconomics the supply and demand relies on both the competitors and the cost. At the point in which the bidding is done is referred to as the equilibrium. Macroeconomics showed us that when the jobs and population were increased the increase or decrease on the apartments occurs. The equilibrium is higher than it was before and therefore the number of apartments that were demanded and supplied increased as well.
The price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy when the prices for apartments were lower and the demand was higher. Because of this the prices were increased due to the demand of apartments needed. However, because the prices of the apartments increased the demand for apartments decreased or stayed the same over a short period of
time.
It seems to me that supply and demand is sort of like dealing with the stock market. When the demand is great you increase the prices to make big profits, however when the demand is lowered than the prices decrease to make sure that the company will come out at least even in the end.
References
University of Phoenix. (2003). Applying Supply and Demand Simulation [Multimedia]. Retrieved from University of Phoenix, eco365 website.
University of Phoenix. (2003). Applying Supply and Demand Simulation [Multimedia]. Retrieved from University of Phoenix, eco365 website.