Supply and Demand concepts are revealed in a simulation called “Applying Supply and Demand Concepts” (UoP, 2013). The simulation is based on an apartment building which is based out of a town called Atlantis and the company rents two bedroom apartments. Numerous factors are considered in the simulation to explain distinction in supply, demand, rental prices, surpluses and shortages. The idea is to classify two microeconomic and two macroeconomic principles present in the simulation and to explain why these principles are categorized as macro or microeconomic. The paper will also conclude one shift of the demand and supply curve and from the simulation, as well as why these shifts occur. Their impact on the equilibrium price, on decision making, and on quantity will be also analyzed. Then, it will refer to ways in which concepts about supply and demand can be applied in a real life-situation or in the workplace. Last, the paper will refer to how the price elasticity of demand has an impact on the consumer's purchasing and on the pricing strategy of the company (UoP, 2013).
Macro and Microeconomic Principles
A microeconomic principle that stood out at the beginning of the simulation was the use of the word “monopoly”. The simulated management organization has a monopoly in the rental field within Atlantis. I considered it to be a microeconomic principle in that it was limited to a certain region. On a macroeconomic scale, it would not hold true because of the fact that there are numerous rental management organizations throughout the world. In the Atlantis, supply and demand of the rental apartments is another concept of microeconomic in the simulation. Conversely, at macroeconomic level, we can talk about the changes in population trends when it comes to choosing to rent or not to rent apartments as well as factors that influence these changes (UoP, 2013).
Fluctuations in supply and demand
In the simulation, the factors that influence supply and demand are the accessibility of the rental apartments, the number of existing renters, the demand for the rentals and the price. These factors influence the fluctuations in the supply and demand in the simulation, and bring the changes in the equilibrium level which creates shortage or surplus.
Cause of Changes
The fluctuations in supply and demand in the simulation are caused by different factors throughout the simulation. The causes included changes in vacancy rates, low rental ...