Supply and Demand Simulation Supply and demand is a concept at the heart of both macroeconomics and microeconomics. The fictional apartment management described in the simulation is impacted by numerous economic factors. The microeconomic concept of changes in the supply and demand equilibrium is found in the simulation by affecting the apartment management companies local market. The macroeconomic concept of price elasticity and price ceiling are found in the simulation because they not only affect the apartment management company, but the market outside of the local region. The simulation showed that either a shift in the supply or demand curves could result in significant alterations in the economic market. An example would be if the demand curve were to shift to the left, that would mean a decrease in demand from customers and therefore less apartments would be rented. The simulation showed this by portraying a large increase in peoples desire to own property rather then rent. This would cause the management company to lower its prices to attract new customers. The equilibrium price dropped due to a decrease in demand, but the supply never changed. If on the other hand the supply curve were to shift right it would show a greater number of apartments available to rent. This could happen if the company was to expand their apartment building to gain additional apartments to rent. If there was no increase in the demand for the apartments the company would then have to decrease the price in order to fill the additional apartments. This would generally only be an option for a company if the demand was present to maintain the normal prices. The apartment management company should make business decisions based on the above economic factors in order to maintain the apartment price and the occupancy of the apartments. If the units are not being rented in a timely manner, the most obvious solution is to make a price adjustment to meet the microeconomic supply and demand conditions. The simulation shows how failing to pay attention to economic conditions would prevent a company from operating at optimum efficiency. Throughout the simulation, the company had to react quickly to many opportunities and changes in the economic climate to ensure the highest possible price could be obtained on available apartments.
Macroeconomic factors can cause supply and demand shifts that have a large impact on equilibrium price and quantity. Price ceilings put a limit on the amount that the apartment management company can charge for rent, and therefore prevents the apartment management company from charging the highest price they could obtain if the demand was high enough for the apartments. This would affect price elasticity by not allowing for the full impact of price elasticity to be measured. Microeconomics also play an important roll in equilibrium price and quantity. Changes to the supply and demand curve are the focal point in figuring the apartment rental price. Numerous reasons for supply and demand curve changes would have an impact on the raise or decrease of rental
