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Ec 372 Week 2

In: Business and Management

Submitted By cart8750
Words 872
Pages 4
Supply and Demand Simulation
Crystal Carter
ECO/365
August 20, 2013
Esperance Namugabo

Supply and Demand Simulation
Good Life Management is a property management firm with a monopoly hold of apartment complexes in the small city of Atlantis. The only like substitute in the city is Oakridge Builders that provides detached homes to its renting customers. This simulation covers the supply and demand concepts that affect, the rental rates within this constant evolving small city.
When the Company Lintech moved to Atlantis the city seen an increase in the population that increased the demand by consumers for apartments but not the firms supply. This shift caused the demand curve, and the relationship between the price and quantity demanded to shift right because more apartments were demanded than what the quantity supplied at the prievious equilibrium. This created a shortage within the market because more was demanded than what were being supplied. The demand-generated increases in the rental rates, quantity demanded decreased, an increase in supply to meet the new prices, and the shortage reduction decreased. The firm proceeded with these adjustments until there was no longer a shortage or surplus in the market. The rent and number of apartments remained unchanged as the demand was also frozen.
Once consumers began choosing condominiums instead of the apartments Good Life went along to appease their tenants. The demand for condominiums prompted the firm to convert apartments causing a decrease in supply. With a decrease in tenants and apartments, there became a decrease in demand and a decrease in supply. At this point, both the demand and supply shifted left. Increasing the rental rate, allowed for more apartments. The rates rising it created less demand with a new reduction of shortages. This will continue while obtaining the equilibrium again…...

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