Supply and Demand Simulation free essay sample

In this paper I will discuss and identify two microeconomics and two macroeconomics principles or concepts from the simulation. I will explain why I have categorized these principles or concepts as macroeconomic or microeconomic. I will also identify at least one shift of the supply curve and one shift of the demand curve in the simulation, and what causes the shifts. I will discuss how each shift, and analyze how it would affect the equilibrium price, quantity, and decision making. Two microeconomics and two macroeconomics principles or concepts Microeconomic theory considers economic reasoning from the viewpoint of individuals and firms and builds up to an analysis of the whole economy. Microeconomics is the study of individual choice, and how that choice is influenced by economic forces. Microeconomics studies such things as the pricing policies of firms, households’ decisions on what to buy, and how markets allocate resources among alternative ends. Our discussion of opportunity cost was based on microeconomic theory. We will write a custom essay sample on Supply and Demand Simulation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In the simulation scenarios one and three are microeconomics principles because they deal with the part of economics that is about single factors and the effects of individual decisions. In both scenarios the levels of vacancy were individual decisions and prices were adjusted to meet the decision expectations. The fourth and seventh scenarios are examples of macroeconomics. In the fourth scenario the population is going to increase due to a new corporation is moving into town and all their employees. This would affect all of Atlantis by increasing the population, lower the unemployment rate by creating new jobs, and growth in many other sectors will take place primarily in real estate since everyone will need places to live. In response to the growth Good Life’s apartment rates will increase from $1150 to $1400 due to the higher demand. As the demand for apartments goes up the prices go up as well, but eventually as shown in the seventh scenario some families could not afford the high rent prices so the government stepped in and put a ceiling rental prices. Shifts in the Supply and Demand Curves The demand curve in scenario one shifts down as the rental rates and the vacancy rate go down which mean more units are rented out. This is how to handle a surplus which in turn leads to lower equilibrium prices. If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. The supply curve in scenario shifts up as the rental rates go up because a zero vacancy rate is being achieved. This is leading towards a shortage because the supply has run out which leads to higher equilibrium prices. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price. Equilibrium price, quantity, and decision making Changing the equilibrium of the curves means a couple of different things when it comes to the price GoodLife would want to charge in order to rent as many apartments as they can. The change to the supply curve would normally cause a shortage in supply and demand would increase, therefore allowing GoodLife to raise their prices. The decrease in demand without change to supply would decrease prices because of the surplus of supply. However, because demand and supply decreased due to the change in preference and a loss of rental units, both curves moved toward the right. This moves means that the demand decreased as well as the supply, and to keep the equilibrium of the rental properties, GoodLife would have to decease their prices in order to keep consumers renting apartments instead of buying condos. Supply and demand from my understanding of a real-world product which I am familiar Recently I was talking to a classmate about the demand for Guns and Ammunition in the United States and how it is making headlines. Ammunition in the United States is hard to come by these days because of the increase in demand due to the government changing gun laws and making restrictions. Try going to your neighborhood Wal-Mart to buy some . 22 bullets for target shooting, or a couple of boxes of shotgun shells, and you’ll discover what hunters and gun enthusiasts have been muttering about for months now: The shelves are bare. Manufacturers are operating flat-out but can’t keep up with demand, as consumers snap up every box of ammo as soon as it comes on the market. Wal-Mart limits buyers to three boxes when they’re available, and Cabela‘s is limiting online orders to one box per day of the popular . 22 long shells increasingly used as cheap ammo for target rifles and pistols (Fisher, 2013). These current events have shown me the true nature of microeconomics and how different circumstances can change the preference of the population and how it affects prices and the supply available. Supply and demand allows me to understand why the price of orange juice goes up or why gasoline cannot keep a steady price. The principles of macroeconomics show me how the unemployment rate, politics, and federal taxes and tariffs can adjust the supply and demand as easily as frost in Florida can. (Colander, 2010) But these principles also show me elasticity in prices and how some things do not change. For example, demand of the GoodLife apartments would remain a constant demand if not for other circumstances, meaning that the price was inelastic. (Colander, 2010) However, certain changes such as a change in preference could decrease the demand, thus forcing GoodLife to raise prices in order to maintain total revenue. Now being a month-to-month rental company, supply and demand would constantly be changing, but if GoodLife found a good price that allowed renters to rent at fair prices, their demand would become inelastic as well as the prices for the apartments. This simulation put micro- and macroeconomics in perspective when it comes to real world scenarios. Just like the price of anything else, supply and demand are what makes the prices, so really high prices are no one to blame but the consumer that demand more product. Different principles were displayed throughout the simulation for both micro- and macroeconomics, and both were relative to the simulation in regards to real-life scenario. Of course, more principles affect the economy and how economists analyze the economy, but these principles have been the building blocks to understanding how and why prices rise or fall. Supply and Demand Simulation free essay sample I have worked on a simulation that was conducted to understand supply and demand when renting out apartment homes. In this paper I will briefly explain two microeconomics and two macroeconomics principles, it will also include one shift of the supply curve and demand curve in the simulation. Also I will talk about for each of the shifts the affect of the equilibrium price, quantity, and decision making will be analyzed. It will also describe the supply and demand from the simulation and how to apply it in the workplace is included. Lastly I will talk about the concepts of macroeconomics will be explained, and how understanding the factors that affect shifts in supply, and demand on the equilibrium price. In addition an explanation of how price elasticity of demand affects a consumer’s purchasing and firms pricing strategy will be included. The first thing I will be explaining will be that I will identify two microeconomics and two macroeconomics principles or concepts from the simulation and explain why I have categorized these principles or concepts as macroeconomic or microeconomic. We will write a custom essay sample on Supply and Demand Simulation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page A concept that was used in the simulation would be the decision making I have to make in order to make Good life apartment complex more successful. Another concept used in the simulation would be the studying the behavior of the economy. Depending of how the economy is will determine the prices we have to put on our apartment complex in order to keep up with other surrounding apartments and make ours more successful. This is determine by checking the employment rate, supply and demand. Identify at least one shift of the supply curve and one shift of the demand curve in the simulation. What causes the shifts? The changes in supply and demand in the simulation are caused by different factors throughout the simulation which causes the shift to change in supply and demand curve. The causes included changes in vacancy rates, low rental rates in close by towns, imbalances between quantity demanded and quantity supplied at current rental rates, changes in population (depending the population), personal incomes, and affordability of apartments. All these things are what cause the supply and demand curve. The more people make and the more people are where the apartment complex are at determines weather the prices should be high or low and if we will be successful renting it out at our rates. For each shift, analyze how it would affect the equilibrium price, quantity, and decision making. The shift affected by supply or demand, is determined by weather if the supply or demand were decreased or increased. If the shifts were to the left or right had to be taken into consideration before decisions could be made. A supply shift to the right indicated a decrease in the rental rate was necessary, whereas a supply shift to the left indicated an increase in the rental rate was necessary to reestablish equilibrium. How may you apply what you learned about supply and demand from the simulation to your workplace or your understanding of a real-world product with which you are familiar? I can apply what I learned about supply and demand from the simulation in my workplace because I now have a better understanding of how things work. I know how I can attract consumers and what they are looking for in order to make my workplace more successful. I also have a better understanding of how depending on the economy will determine how my business will run and what will help my business still be successful even when the economy is no that great. How do the concepts of microeconomics and macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? The concepts of microeconomics helped me understand the factors that affect shifts in supply and demand on equilibrium price and quality by helping me with decision making. Also it helped be because sometimes the price reflects a lot on the quality of the item you are purchasing. This affects shift because if you are sale something that is good quality and a fair price that means you are most likely to sale more which will most likely have a more successful rate. This will also help me in the affects of how the economy is because people today want things that are good quality and a price that is still affordable. In conclusion, this simulation was a lot of helped and will be a great reference in the future for any future supply and demand questions or concerns I may have. I know have a better understanding of the supply and demand curve of how it works and what can cause the changes. Also I have a better understanding of how prices are determined and what helps determine these prices, specially when it comes to apartment complex of how it helps in order to have more rental apartments and have a more successful business. Supply and Demand Simulation free essay sample This simulation of â€Å"Applying Supply and Demand Concepts† gave me a true understanding of how things work in the market place. We go through life dealing with these situations, but not knowing how they really affect us and the world around us. I had some ideas of how these principles worked, but was I taken for a loop when I tried to balance out the equations. This is what I learned from this simulation and how it applied to real-world occurrences. Two Macroeconomic and Microeconomic Principles The two principles that I found that related to the simulation for microeconomics were supply and demand, and scarcity. These two principles both have a direct effect on what a people will do, on a personal level, when it comes to their economic decisions. The simulation showed what would happen if more positions became available and people came to fill those positions. This caused a scarcity of living spaces which in turn caused a shift in the supply and demand curve. We will write a custom essay sample on Supply and Demand Simulation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page When looking at two principles that are related to the simulation for macroeconomics, I found that the use of government restrictions on rental prices and economic growth had the most effect. These two items had a greater external influence on population growth than what could have happened with the microeconomic principles. Identify one shift of the supply curve and one shift of the demand curve. When discussing a shift in the supply curve in reference to the simulation the shift was caused when there was an increase in income for the population because of the increase of new jobs. The simulation also showed that the supply curve decreases, and it shifted to the left because the renters wanted a detached rental versus being in an apartment complex. When the population increases then the demand curve will shift. This was caused by the large stream of other companies moving into the area. So, with more population also came a shortage of available apartments, which caused the demand curve to shift to the right. How does each shift affect the equilibrium price, quantity, and decision making? When analyzing the demand curve, see if the supply curve is constant, if it is, then a shift to the left will decrease the equilibrium price, and it will also increase the quantity demanded. The opposite will happen if there was a shift to the right of the demand curve. The influences on the supply curve, if the effects on the demand curve are constant, would also have an opposite effect. This will cause a shift to the left, and it will increase the equilibrium price, and also it will decrease the quantity demanded. The outcome of this is that as price’s increases, the demand will decrease regardless of what combination of shifts that might occur. How can I apply what I have learned from the simulation to my workplace? One of the bestselling products at Vi-Jon is their Germ-X Hand Sanitizer. They make this product every day, 24 hours a day. During the flu season, it is supply and demand. We make as much product as we can, even to the point of bringing in extra people on off-shifts to make sure that we can meet our customer’s demand. It is also their most profitable time of the year, and this generates revenue to support the company during the time they are out of the flu season. During the flu season, our prices are higher on this product to support around the clock coverage. During the off seasons, our prices are lower. This also plays into the winter shutdown for two weeks during the holidays. This allows the plant to do needed maintenance and still fulfill their customer’s needs. How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? When discussing supply and demand the premise is based on some sort of market expectation. These shifts of curves are trying to find a way of neutrality between companies and their consumers. The key is to find a medium, in reference to price, that their customers would not mind paying, whereas the company would have no problem selling their products. Once the company has reached that point of equilibrium, where they can sell their product and the customers do not mind paying that price, then they have a positive arraignment for both. How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? When looking at the concepts of macroeconomics, they have helped me to understand that there will always be external factors that will affect cost, supply and demand. What I have learned from the simulation is that the government can come in and adversely affect prices by putting a ceiling on what the market can charge. It also can cause companies to change their formats in order to adjust to these changes, like from apartments to condos. This way, the government can meet the demands of the population by limiting the cost that the companies can charge consumers, and opening up areas where new jobs can open and flourish. Relating to the simulation, explain how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy. I have learned from this week’s reading that â€Å"price elasticity is the percentage change in quantity divided by the percentage change in price. (Colander, 2010)† What this boils down to is how companies understand the receptiveness of their customers to changes in prices. In the simulation, Good Life had to constantly adjust to the changes in the market in reference to availability, competition, and government control. They needed to remain competitive, but also increase revenue during some volatile times. By using this formula, they were able to adjust and continue to grow in an ever changing market.