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Eco 365 Week 2 Individual Assignment

In: Business and Management

Submitted By kyasmom005
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Microeconomics and the Laws of Supply and Demand
Megan O’Brien
RIna Bills

The simulation on supply and demand relates to the Goodlife Management Company which leases apartments to renters. As the property manager, I was asked to set rental prices in a variety of situations in order to meet the demands of the population in the area while attempting to maximize profits for my company. Microeconomic principles such as the law of demand, the law of supply, equilibrium, and price ceilings were all factors in determining price. Macroeconomic principles such as the consumer price index and fiscal policies which can institute price ceilings also related to this activity. Goodlife was considered a monopoly in the market in the area of Atlantis because it was the only rental company. In the first simulation, I was asked to lower the rental rate to increase quantity demanded and lower the vacancy rate. I was successful in increasing demand but was unsuccessful in maximizing revenue. However I was successful in determining the equilibrium rental rate and equilibrium quantity. This can be done by finding the point at which the supply curve and demand curve intersect and there is no shortage or surplus. A new company, Lintech, then moved to the area increasing the population and increasing the demand for apartments. Supply decreased and left a shortage of apartments. Was correct in identifying the increase in rental rate and demand by was incorrect in identifying the impact on supply. Employees of Lintech then began purchasing detached homes as opposed to renting apartments which decreased the demand for apartments. The equilibrium rate was $1,300 and supply and demand were equal at 2250. More companies came to Atlantis, increasing the population again but the government instituted a price ceiling of $1550. While the demand increased, the price…...

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