The supply and demand simulation is based on the management of rental apartments by GoodLife Management in the fictional town of Atlantis. Atlantis is a small city with open spaces, low population, and a low crime rate. There are plenty of sidewalks and street systems for easy access to the highway. The housing in Atlantis is detached homes and apartments. GoodLife currently has 2,000 two-bedroom apartments and is required to decrease the monthly vacancy from 28% to at least 15% to increase revenue. GoodLife has to find what rental rate to input so all expenses are covered. There are many changes to the simulation that affect supply and demand. There are also shifts in the supply and demand that affect the decisions made by GoodLife. There are four key points in the emphasized in the simulation; supply and demand, equilibrium, shifts in the supply and demand, and price ceilings.
The concepts in the simulation can be related to the workplace of the author of this paper. Factors that affect supply and demand in the simulation are driven by the availability of the rental apartments, the demand for the rentals, the number of available renters, and the price. According to the simulation, a demand curve is downward sloping. In the simulation, as the price decreased, demand increased. The supply curve, on the other hand, is upward sloping. The quantity of two-bedroom apartments increased as the price increased. A surplus in the market for the apartments exerts downward pressure on the price. This means to attract the possible renters, GoodLife would need to lower prices. On the other hand, a shortage in the number of available apartments exerts an upward pressure on the price.
The Term Paper on Demand-Supply Analysis Of Acer Notebooks
Introduction Supply and demand is one of the most fundamental concepts of economics and it is the backbone of a market economy. It is defined as an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity ...
To maintain the balance of quantity demanded and the quantity supplied, GoodLife would need to raise the prices. Shifts in supply and demand in the simulation were caused by several factors. Changes in the direction of GoodLife Management and the population changes within Atlantis and outlying areas had an affect on supply and demand in the simulation. Changes in the preference of the tenants caused the demand for the apartments to decrease. GoodLife Management began converting the rental apartments into condominiums that were for sell, causing a decrease in the supply at the same time as the decrease in demand. Price elasticity of demand simply refers to customer’s responsiveness or sensitivity to changes in price (Ferrell & Hartline, 2008).
In the simulation, an increase in price led to a decrease in the demand of apartments. The simulation recommended that the price should be optimized to achieve maximum profits, while at the same time ensuring that the pricing would still be favorable to the customer. This is the point of equilibrium. Prices above this point would lead to surplus and prices below would lead to a shortage. The simulation has been effective in determining the effectiveness of the forces of demand and supply.
References
Keen, P. G.W. (1980).
Decision support systems : a research perspective. , Retrieved from http://hdl.handle.net/1721.1/47172 Kroenke, D.M. (2012).
MIS Essentials (2nd ed.).
Upper Saddle River, New Jersey: Prentice Hall.
