Supply and Demand Simulation

Supply and Demand Simulation

The simulation describes several factors that include the price increase and price decrease that changes the supply and demand. A decrease in rental prices increases the demand for unattached houses. The increase in rent for two-bedroom apartments causes a decrease in demand of unattached housing by a significant margin. This means suppliers can supply more unattached housing at a higher price.

The two principles of microeconomics are shown in scenario one and four. Scenario one explains the decreasing of the rent to lower its vacancy percentage and to maximize its revenue. To focus on supply and demand Susan Hearst focuses on a month-to-month basis of 28 % and recommends lowering the month-to-month lease to 15 % as a temporary fix. In scenario four there is a new inhabitant called Lintech Inc. who is moving to Atlantis. This means there is an increase in population and jobs, which means they must increase rental rates as there is an increase in demand. This scenario applies to vacant apartments and the renewal of leases.

The two principles of Macroeconomics are shown in scenario three and seven. Scenario three discusses the survey statistics of Atlantis Housing of demand as a whole and how individuals who work in Atlantis live in the next cities that have less rent. In scenario seven it discusses how the government imposes a ceiling of $1,550 the monthly rent of the two bedroom apartments for middle-class families so they can afford to live in the City of Atlantis where they also work.

A shift of the supply curve in the simulation is expected to change as there is a decrease in the two-bedroom apartments. There is an upward slope of the supply curve, the quantity supplied is increased, and there is an increase in how the price moves up in the supply curve, which allows the company to increase the rental rate and is able to lease more apartments.

A shift in the demand curve of the simulation increases population as the arriving company to Atlantis offers more jobs for individuals, and hiring from the previous city increasing the demand curve. The demand curve slopes downward meaning the quantity of demand will increase as price decreases of the demand curve. The company may want to reduce its rent to increase the apartment's quantity of demand.

The equilibrium point of demand equals the quantity supplied. The price will fall below the point meaning the demanded quantity exceeds the supplied quantity that causes a shortage of apartments. This means individuals will spend more than what the supplier will release the price. As the price increases the quantity of demand decreases and the quantity supplied will increases and the equilibrium continues until it is achieved again. The opposite occurs when the price is above the equilibrium and supplied quantity exceeds the quantity demanded. There is also a surplus within the market and the producers