Supply And Demand Simulation Essay

901 words - 4 pages

(Individual Assignment Week 2)

Atlantis is a nice city that’s is well maintained and booming with young professionals and families alike. Good Life Management is the premier choice for tenants seeking two bedroom apartments and also is the only choice. Often times in the real estate rental industry rental apartments experience a higher degree of vacancy and Good Life is looking to reduce the vacancy rate from 28% to 15%. Lowering the amount of available units was no easy task for Good Life management and likely would not have been achieved with a solid understand of the principles of the micro and macroeconomics and the ...view middle of the document...

Macroeconomic principles come into play in the simulation when considering how many units to keep rented and how many to keep empty in order to maintain a health supply and demand balance for the apartments. Macroeconomic principles help the property management company determine if it is wise to rent or not to rent all of tit’s buildings. The law of supply applies when making decisions to rent property because an increase of quantity of goods decreases the price at the same time.

In this weeks simulation a demonstration it was apparent that supply and demand was being induced into the simulation. The number of two bedroom apartments was 2,000 and the rental company was looking for a way to increase revenue by lowering the vacancy rate from 28% to 15%. The goal of 15% was achieved by lowering the rent this making people want to move into their apartments due to the reduced price. Subsequently as the demand for the lower costs apartments went up the supply of apartments increased respectively.

A shift in the supply and demand curves was demonstrated because as the number of available apartments increased the supply curve shifted to the right. This is because as the rental rates go up so does the supply. By renting all of the 2,500 apartments the rent cost was pushed to $1,500the demand curve shifted down and the increased rental rate caused the demand for the rentals to decline. In the simulation it was shown that the rent had to decreased to $1,050 in order for equilibrium, (supply equal to demand) to be obtained.

The principle is this simulation can be applied to my real word live in many ways. As a property owner who has and continues to rent property to tenants I am able to apply my...

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