Supply and Demand Simulation
Allison Mullen
Microeconomics 365
March 11, 2013
Vilma Vallillee

Supply and Demand Simulation
Macroeconomics looks at the economy as a whole, concentrating on factors such as interest rates, inflation, and unemployment (Colander, 2010). It also studies economic growth and the government’s role to moderate the harm caused by recessions. During the simulation government intervened and tried to set a price ceiling on two bedroom apartments to provide homes for those that were struggling in hard economic times. The simulation also talked about population trends and how they affect decisions in the marketplace. For instance, an increase in population caused demand for two-bedroom apartments to increase, but a change in preferences caused demand to increase.
Microeconomics focuses on individual people and individual businesses (Colander, 2010). It analyzes individual entities or activities such as supply and demand in the market, and the effects of behaviors and decisions. The simulation gave two examples of microeconomic behavior as it explained how individuals react when faced with decisions about how to spend their money. It also stated that Atlantis was considered a monopoly because it has no housing development competitors nearby. Their profit incentives lead them to raise prices and lower output in order to get the most out of consumers.
In determining the rental rate for Atlantis tenants it is important to understand that more quantity is demanded at a lower price. When the rental rate is reduced, the more tenants are willing to rent which leads to lower vacancy rates. As the rental rate lowers, revenue initially increases, it will then reach a particular rate and quantity demanded, and then decreases.
Atlantis incentive to supply more is when it is at a higher price. The supply curve is upward sloping as the