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Supply And Demand Simulation Essay

852 words - 4 pages

Supply and Demand SimulationTracy CouteeECO 365September 29, 2014Christopher RakovalisSupply and Demand SimulationSupply and demand play a crucial role in both macroeconomic and microeconomic settings. The week two simulation of GoodLife, a fictional apartment management company in Atlantis, demonstrated the impact of various economic factors. Changes in supply and demand, as well as equilibrium, are microeconomic concepts that impacted the way the company operated its small apartment market. Price elasticity and price ceilings are macroeconomic concepts that impacted the ...view middle of the document...

The simulation demonstrated how failing to consider economic conditions would prevent the company from operating at maximum efficiency and maximizing profit. GoodLife had to react quickly to economic factors throughout the simulation to take advantage of the available opportunities and ensure the best prices were obtained for the leasing of the apartments during the different changes.Supply and demand shifts can be attributed by macroeconomic factors that have a substantial impact on equilibrium price and quantity. The cap on the amount of rent that can be billed also known as a price ceiling prevents a management company from obtaining the highest possible price for apartments if demand was sufficient. The price elasticity would also be affected if a price ceiling were in place because it would be difficult to measure the full impact of elasticity.When it comes to equilibrium price and quantity, microeconomic factors played a role as well. Changes to supply and demand were the most important contributing factors in determining the rental price in this simulation. The simulation provided different scenarios in which changes in supply and demand in the apartment market contributed to both increases and decreases to price. These economic conditions resulted in the company constantly seeking the equilibrium price at which demand could be filled at the highest possible price. Businesses must face these challenges at all levels including both microeconomic and macroeconomic aspects.The importance of price...

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