Individual Supply and Demand Simulation Essay
Individual Supply and Demand Simulation
In the University of Phoenix simulation (2003), the “applying supply and demand concepts” simulation made it very easy to understand how supply, demand and the equilibrium function together. The simulation was based on scenarios of renting two-bedroom apartments in a city called Atlantis. In the simulation, several factors are utilized to explain the distinction in demand, supply, price of rent, shortages, as well as surpluses of apartments for rent. It also provided an opportunity to learn the difference in movement along and shift curves of supply and demand to re-establish the equilibrium. The simulation was easy to use and the graphs helped …show more content…
A shift in the supply curve occurred due to a decrease in demand. According to Colander (2010), 400 apartments were converted into condominiums that were placed on sale leaving 2,800 apartments for lease. The decrease in the supply occurred due to decrease in demand. The supply curve was shifted to the left in response to the changes. These changes increased the apartment rental rates.
A shift in the demand curve occurred because the income increased with the move of Lintech that led to a decrease in demand of rental apartment because people preferred to purchase detached homes. According to Colander (2010), at the time Goodlife had 3,200 two-bedroom apartments available for lease at rental rate of $1450. Rent was decreased to attract tenants so the apartments can be rented. These changes forced the demand curve to shift to the left.
The equilibrium rental rate and quantity is based on whether the effects are higher for the supply or demand curve. In this case, the changes in the quantity of supply curve is greater than the quantity demanded, therefore, there will be a shortage of original equilibrium rental rate on temporary basis. These changes occurred because the quantity supplied is less than the quantity demanded. In the case of demand, there is