...Supply and Demand Concepts at Work: Goodlife Management Company Microeconomics and Macroeconomics at Work The two microeconomic concepts at work in the simulation were the law of demand and supply. According to the law of demand, more quantities of a product or service will be bought at lower prices than at higher. As the Goodlife Management Company lowered their rental rate, their vacancy rate decreased thus indicating there was an increase in demand as the prices were lowered. According to the law of supply, as the price of a product or service increases, supply of that product or service increases. As the Goodlife Management Company, raised their rental rates, they leased more apartments since they were valued at a higher price. Shifts in the Supply and Demand Curve There was a shift in the demand curve when Lintech Inc. moved their business into the city of Atlantis resulting in an increase in population and thus an increase in demand for Goodlife Management’s apartments. Due to the shift of demand for apartments due to the increase in population, the equilibrium price and quantity will also increase. Thus, Goodlife will lease more apartments at a higher price due to the increase in demand and equilibrium price. There was a shift in the supply curve when Goodlife Management converted some of their two bedroom apartments into condominiums due to the sustained decrease in demand for apartments as the population’s income increased. Due to the shift of supply of apartments...
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...Lisa Krezman ECO/365 October 21, 2013 Ramaling Iyer Supply and Demand Atlantis a small city with a distinguished atmosphere that has paternal for grow. A company Goodlife is looking at the effects of supply and demand on two- bedroom apartment rental. Goodlife is a property management company that manages seven apartment complexes with two-bedroom unit for rent in Atlantis. Currently, Goodlife who has monopolized the rental units in the Atlantis area is the only company who manges the rental unit within the area. Goodlife management is a monopoly in the apartment complex rental industry in Atlantis. Oakridge builders are a competitor trying to break up the monopoly that Goodlife occupies. Oakridge builders provided rental detached homes versus apartment complexes. As the regional manager for Goodlife the company has decided to lower the rental rates to meet the demand of possible tenants. Because of the reduction in rental price it caused a shift in the demand for rentals in a positive way. Goodlife reduced the rental rate by 15% however; there are still 300 vacancyies. At a rental rate of $1,050 per month this reduced the vacancy rate to a targeted level. At this rental rate, there were tenants for 1,700 apartments. This gives Goodlife revenue of $1.79 million. Even though there are vacancy’s Goodlife is still making money. When reducing prices to meet the demand of the consumer, the company will sell more. Reducing the price will cause a shift in the supply demand...
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...and demand affects the two-bedroom rental apartments in Atlantis as well as Goodlife Management properties. In addition, this paper will describe how supply and demand relates to both microeconomics and macroeconomics. Furthermore, this paper will explain how specific factors affect shifts in supply and demand on equilibrium price and quantily and how it affects a consumer’s purchasing and the firm’s pricing. Economics is separated into two sections: microeconomics and macroeconomics. Colander (2010) states, “Microeconomics is the study of individual choice, and how that choice is influenced by economic forces. Macroeconomics is the study of the economy as a whole. It considers the problems of inflation, unemployment, business cycles, and growth” (p. 15). There are microeconomic and macroeconomic principles and concepts addressed in the stimulation. Microeconomics A firm ability to adjust pricing affects revenue. To increase revenue and decrease occupancy Goodlife decreased the monthly rental rate from $1300 to $950 a month. In decreasing the monthly rental rate, the demand for the apartments increased causing a decrease in the vacancy rate. An increase in occupancy contribiuted to an increase in revenue.. In decreasing the price of the apartments, the firm increased revenue and occupancy. The decrease in price caused the downward shift in the demand curve. Another microeconomic scenario is Goodlife made a decision to lease all 2,500 two-bedroom apartments but understood...
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...that good. As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more” (Heakel, 2014). “Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue” (Heakel, 2014). The simulation exercise gave a real life scenario regarding a property management company named GoodLife that owned and leased apartments throughout the United States, focusing on a particular city, Atlantis, which was in the middle of an industrial growth. A Shift in the Demand Curve GoodLife began with 2,000 apartments in the city Atlantis. They had a high vacancy rate with overpriced apartment rates. The...
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...Supply and Demand Goodlife Management was the only firm in Atlantis that rented apartments. This gave Goodlife Management an advantage in the housing market. Detached rental homes owned by Oakridge Builders were the closest substitute to the apartment rentals. Without a substitute for rental housing in the Atlantis area, Goodlife Management maintained a monopoly in this market. Many factors cause changes to the supply and demand of a product or service. Companies need to make adjustments to pricing, supply, and demand to reach the equilibrium. Microeconomics With a vacancy rate of 28% Goodlife Management made the decision to lower the rental rates decreasing the vacancy rate down to 5%. The decision to lower the rental rates also enabled Goodlife Management to increase revenue. This product, two-bedroom apartments, demanded more quantity at a lower price and the supply quantity remained constant. This decision allowed the vacancy rate to decrease, revenue to increase, but still leaving a surplus of 100 apartments not rented. To rent the remaining apartments Goodlife Management would need to reduce the rental rate even more. Macroeconomics The increase in the population of Atlantis after new companies began developing businesses caused an increase in the demand for two-bedroom apartments. Lintech Inc, expanded its operations to Atlantis resulting in the population of Atlantis to increase. The demand has increased and the supply has stayed the same. The rental...
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...simulation was easy to use and the graphs helped understand the curve movements better. An analysis of why different situations occurred based on the different scenarios in the simulation will be discussed. The two major microeconomic concepts discussed in the simulation are Supply and demand. Colander (2010), “Microeconomics is the study of individual choice, and how that choice is influenced by economic forces” (p.15). In this simulation, rental rates are determined based on the changes in the supply and demand. The simulation presented changes with the Lintech move into Atlantis that initially creating higher demand for the apartments. However, the demanded decreased as people seem interested in buying detached homes. In response, Goodlife converted some units into condominium to sell that decreased the rental units. Colander (2010), “Macroeconomics is the study of the economy as a whole and considers the problems of inflation, unemployment, business cycles, and growth” (p.15 ). The two macroeconomic concepts that stood out were the price levels and growth rate of population. Adjusting the price levels were the key to renting maximum number of rental apartments. If the prices...
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...first of the scenarios has to do with lower the vacancy rate. This can be related to the unemployment rate of a country. In order to lower the vacancy rate the company had to lower the prices for the apartments. By doing this GoodLife has made a supply of housing. To lower the unemployment rate there would have to be larger supply of jobs. One of the microeconomic concepts is a monopoly. A monopoly is a market structure in which one firm makes up the entire market (Colander, D. C. (2010). In the case, the apartment company GoodLife is the only provider of apartments to the resident of Atlantis. The other microeconomic concept has to do with the supply and demand. In the simulation an organization, Lintech Inc, move into Atlantis creating a demand for housing. In order for GoodLife to keep up with this increase in demand, the company had to raise the prices for its apartments. GoodLife did not increase its supply of apartments, so by raising the rental rate the demand for these apartments goes down. This allow for the company to utilize all of its apartments for the highest price which can increase the profitability. Then for both decreases in the demand for the apartment, GoodLife had to lower the rental rate for its apartments. One of the decreases GoodLife converted 400 apartment builds into condominiums. This will...
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...and streets. In Atlantis, the housing is either detached homes or apartments. GoodLife Management is a property management company that manages 7 buildings which consist of 2 bedroom apartments. GoodLife is the only company that rents out apartments, and this considered a monopoly (University of Phoenix, n.d.). In this paper, we will cover two concepts of Micro and Macro, what shifts the supply and demand curve, how it applies to a real-world product, and elasticity. In both micro and macro economics we learn about two concepts, which are supply and demand. Microeconomics which is the study of an individual choice and how the force in the economy has an effect on it and Macroeconomics studies the whole economy and all the factors. According to Colander (2010), “Supply is a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant. Demand is a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant” (p. 983-984). GoodLife supplies 2-bedroom apartments on a temporary month-to-month lease which according to our survey team is what is in demand at the time. There are many reasons the demand shift moves one reason that has come up is change in preference. People who obtain better jobs with better pay might decide they can afford to buy instead rent. Where the supply curve only moved when GoodLife converted the 2-bedroom apartments into condominiums for sale. Thus, there are...
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...included both microeconomics and macroeconomics concepts. The simulation focused on a property management firm, GoodLife Management, and its ability to adjust the levels of supply and demand of two-bedroom apartments in the Atlantis community. GoodLife Management was challenged with changes in population, tastes, income, and a price ceiling. As a result of these factors the firm had to strategize about shifts in the changes in supply and demand and determine the equilibrium price and quantity. The microeconomic principles from the simulation include the supply and demand of two-bedroom apartments and the affects of price. The simulation provided exercises on how to determine the number of apartments supplied, the population that demanded the apartments, and the appropriate price per unit at a given time considering market conditions. Microeconomics looks at the smaller picture and focuses on how individuals and firms make decisions based on economic forces. GoodLife Management had to consider how many apartments to supply and the price levels to charge for them to maximize profit (University of Phoenix, 2011, Week Two Simulation). Macroeconomics views the aggregate economy in terms of unemployment, growth, business cycles, and inflation. In the simulation, two macroeconomic concepts considered are the population growth in Atlantis and business cycles. GoodLife Management considered if it should increase the number of two-bedroom apartments based on what the expected demand...
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...of Microeconomics July 30, 2014 Mr. Keith Watts Abstract The slowdown in the housing market in the US has been accompanied by a sharp fall in house prices and a glut of homes for sale in the market. While the idea that this high number of dwellings for sale should place downward pressure on house prices is intuitive, little empirical work has been done in this area to assess the factors affecting house prices. This paper explicitly models the relationship between changes in prices of houses and various measures of housing demand and supply. A simulation model has been included to help explain the evolution of the housing market and enable one determine the equilibrium price, quantity and prices. The company under consideration is GoodLife management- a property management company that manages seven communities in the city of Atlantis. Keywords: Housing market, supply and demand, price elasticity and economics. Introduction From the demand and supply curve of the firm, various microeconomics and macroeconomics can be identified. Microeconomics looks at the behaviors of individual people and companies within an economy. It is based on the idea of a market economy, in which forces of demand and supply are behind prices and production levels of goods and services. Microeconomics is concerned with supply and demand in individual markets, individual consumer behavior and individual labor markets. Macroeconomics on the other hand gives a “Bigger picture” of the economy. Instead...
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...The GoodLife Management supply and demand simulation is based on the management of 2500 two-bedroom condominium apartments in a fictitious town named Atlantis. According to the simulation they are the only management firm in Atlantis and have a monopoly in the market. The simulation shows the issues the management deals with and gives the opportunity to see how the right or wrong decisions can affect the outcome of those decisions. What causes the changes in supply and demand? GoodLife Management wants to drop their vacancy rate to 15%, in order to change the demand they know they will have to lower the rental rate it will then change the supply and increase the quantity demand. The changes in the simulation that affect supply and demand are driven by the availability of the rental apartments, the demand for the rentals, price of the rentals, and the number of available renters. They can also be caused by changes in population, consumer preferences, and price ceilings. As the price of the rentals decreases it causes an increase in the demand, the opposite would have occurred if the prices would have been above the equilibrium. How do shifts in supply and demand affect decision making? The quantity of two-bedroom apartments increased as the price increased. A surplus in the market for the apartments exerts downward pressure on the price. This means to attract the possible renters, GoodLife would need to lower prices. On the other hand, a shortage in the number of available...
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...Supply and Demand Daniel P. Velasquez ECO 365 May 15, 2014 Dr. Emmanuel Ogunji Supply and Demand Supply and demand are the basis of economics. When discussing economics the terms supply, demand, and equilibrium price are at the forefront. Why are these terms so important when discussing economics, because they are the key components of the subject of economics? Demand can be described as the relationship between price and quantity demanded for a good or service. Each price provided will have a demand relationship that tells the quantity that the customers will purchase at a certain price. The quantity demanded is the number related to the quantity the customers are willing to purchase at a particular price. So it is important to decipher the difference between demand and quantity demanded. Demand is referred to the willingness and ability of customers to buy the good or service in the market. Supply can mean the willingness to sell, also the supplier must be willing to sell the good or service at a price that the customers will demand it. In economics the relations ship between supply and demand is understood as the equilibrium. The equilibrium price is when the supply and demand equal out and there is no rise or fall in cost of a good or service. The equilibrium is a point on a diagram where the demand and supply curve intersect. In the simulation with good life it provides several scenarios to try and explain the shifts, and how it affects the equilibrium...
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...Supply and Demand Simulation Thomas Alejandro ECO/365 February 17, 2014 Mubarak Laminu Supply and Demand Simulation The supply and demand simulation is based on the management of rental apartments by GoodLife Management in the fictional town of Atlantis. Atlantis is a small city with open spaces, low population, and a low crime rate. There are plenty of sidewalks and street systems for easy access to the highway. The housing in Atlantis is detached homes and apartments. At the beginning of the simulation GoodLife had 2,000 two-bedroom rental apartments and is required to decrease the monthly vacancy from 28% to at least 15% to increase revenue. GoodLife has to find what rental rate to input so all expenses are covered. There are many changes to the simulation that affect supply and demand. There are also shifts in the supply and demand that affect the decisions made by GoodLife. Four key points emphasized in the simulation are; supply and demand, equilibrium, shifts in the supply and demand, and price ceilings. The concepts in the simulation can be related to the workplace of the author of this paper. Factors that affect supply and demand in the simulation are driven by the number of available two-bedroom rental apartments, the demand for the rentals, the number of available renters, and the price. According to the simulation, a demand curve is downward sloping, and as the price decreases, demand increases. The supply curve is the opposite of the demand curve...
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...ceiling scenario most interesting and familiar as many apartments where I live are city or government mandated. Most of the concepts in this simulation were relative to microeconomics, the theories, practices, and management in an organization. However, the government mandated price ceiling reflects macroeconomic theories, practices, and management of a states, regions, or countries. Scenario I In the first scenario the objective was to decrease the vacancy rate while maximizing profits. My decision to decrease the vacancy rate to 5 percent by reducing the rental rate to $950 enabled GoodLife to increase occupancy/demand on their two-bedroom apartments; fully maximizing their profits. My decision would also leave GoodLife with a surplus of product/apartments, which is not so good in regards to maximizing profits. In order to rent these surplus of apartments GoodLife would need to continue to decrease their rental rates which would result in a decrease in profits. I particularly relate to this scenario in the sense that I work in a sales related field. When the demand for our products and services increases or our busy seasons, we maximize our profits and increase supply. However, we also increase productions costs/labor to support the additional events....
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...the ability to produce more product or outcome are all aspects of macroeconomics that economists look at to determine or recommend changes to ensure a healthy economy. On the other hand, microeconomics economists study more the supply and demand of a market by studying the habits of the consumer. During the supply and demand simulation, I found a couple different scenarios where there were changes to the supply curves and demand curves. One example of a change to the supply curve was when “Susan” agrees to convert more apartments into condominiums for sale. This would decrease the number of apartments for rent or a decrease in the supply of apartments. Granted, an overall shift from renting to owning would lessen the liability of GoodLife but also decreases the supply of apartments available for the demand should one arise. Like the change to the supply curve, a change to the demand curve is also visible within the simulation. In the same scenario of “Susan” converting apartments for rent to condominiums for sale, the reason for the conversion is because of a change in preferences. This change is because the population shifted more towards owning rather than renting. Now this change in preference changes the demand of apartments. Both of these scenarios change the equilibrium of the curves which in turn changes the price able to charge to maximize revenue and apartments rented. Changing the equilibrium of...
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