Supply and Demand Simulation Essay
The simulation shows over the years, there are several changes to the population of Atlantis and thus the supply and demand of two-bedroom apartment housing. The changes in the supply and demand curves cause the equilibrium price to rise and fall. In the simulation, the price elasticity of demand affects both the customer’s decision to rent and the company’s pricing strategy.
The principles of microeconomics and macroeconomics are both active in the simulation. Examples of microeconomics are the individuals and the GoodLife Company as they made choices because of scarcity and regulation. An example of macroeconomics is the economy-wide change of the government that places a price ceiling on apartments for …show more content…
Shifts in supply and demand cause the equilibrium price to fluctuate as the supply curve and the demand curve shift to the left and right. During the simulation when the population increases, the demand for two-bedroom apartments increases. As Atlantis became more mature, a change in housing preference caused changes to demand. In order for the company to maximize profits, it reacted by adjusting the price to maintain the highest occupancy of apartments. At one point during the simulation, the company also converted apartments to suit changing consumer tastes. When the company converted apartments, this caused a shift to the left on the supply curve, but had no change on the demand curve because of the changing consumer preferences. When the company changed its pricing strategy, it causes either an upward or downward movement along the same demand or supply curve, depending on the situation. This constant fluctuation and adjustment continues as the company strives to maintain equilibrium of price.
Macroeconomics and microeconomics both have an effect on supply and demand that is also seen in the real-world workplace. If a company has the capacity