An individual can eave many wants, but it is restricted by their ability to pay for the goods. The law of supply says that as the quantity of supply rises as the price rises and falls as the price falls. Macroeconomics studies the economy as a whole. It mainly deals with issues with inflation, unemployment, business cycles and growth. Microeconomic Concepts The simulation had many examples of microeconomics principles. A substitute is an example of microeconomics found in the simulation. Godlike Management has a monopoly on apartment complexes because they own all 7 apartment employee in Atlantis.
A substitute in this case is a good that can replace the apartment rental. The closest substitute is provided by Carriage Builders that sell detached homes. The supply curve is another microeconomic concept. Supply refers to the amount of goods or services available. In the simulation the supply decreased as people moved into the area, rental prices decreased, and population increased. The supply increased as more individuals decided to purchase instead of rent, and rental prices increased. Macroeconomic concepts The simulation also contained macroeconomic principles.
The first concept of macroeconomic that was identified in the simulation was monopoly. Monopoly refers to a company’s controls of all the supply of a good or product in a specific area. Godlike Management is the only company that rents out apartments in Atlantis, and that gives them the monopoly of apartment rentals in Atlantis. Another macroeconomic concept identified is growth. Lintels, Inc. Has grown and expanded their operations. Growth is an element that is measured in macroeconomics. Shift of the Demand Curve
Godlike has been in business for two years and now it manages 3,000 apartments. The relocation of Lynched, Inc has increased the population in Atlantis. A shortage of available apartments will exert upward pressure in the price of rentals. The increased population will shift the demand upwards (increase) and there may be a temporary shortage of apartments available. The demand curve will shift right. The equilibrium was affected when the demand increased since there was more demand than available supply. As the rental price increased the demand decreased and the quantity supplied increased.
The equilibrium is higher on the rental amount is higher and the demand and supply has increased. Shift of the Supply Curve Godlike Maintenance looks into the possibility of maintaining a zero rate vacancy. The rental rate needs to be increased in order to cover the cost of maintaining all the available units. As the rental price increases Godlike motivation to increase the amount of apartments (supply) rises. The supply curve is upward slopping, and as the price of the apartment increases the number of apartment supplied also increases. Elasticity
Price elasticity of demand is a way to measure how demand of a good or service responds after a change in price. In the simulation the price was increased and reduced as needed and the elasticity of the good was measured each time. The price of the apartments was lowered to increase the demand and reduce the vacancy rate to 15 percent in the first simulation. In the second simulation the rate is increased as the number of apartments also increases. Measuring elasticity is important for Godlike because it helps them anticipate the result of increasing or decreasing prices.
Conclusion Supply and demand can be applied to any business that sells goods or services. It helps us understand how both are closely related, and how one small change in price can affect the supply and demand from customers. I work at a vocational school in which we teach programs in the medical field. A usual problem we have is filling up a class. I’ve learned that a reduction on tuition prices will increase the amount of students that enroll. In the event that I have an almost full class and few slots available I can increase the price in order to reduce the demand or the service.