Essay about ECO365 Week 2 Assignment

Submitted By tnawedding
Words: 816
Pages: 4

Microeconomics and the Laws of Supply and Demand

ECO/365
March 16, 2015
Sandy Bishop

Microeconomics and the Laws of Supply and Demand
In this paper, we will summarize the content of the Supply and Demand Simulation located on the University of Phoenix student website. The simulation takes place in a small city called Atlantis that has wide-open spaces, adequate parks and green areas, and easy access to the highway. There is plenty of outdoor activities and dotes beautiful wildlife. Housing available in Atlantis are made up of both single-family homes and apartments. It is a well-maintained neighborhood with a low crime rate. GoodLife is a company that manages and rents the apartments located in Atlantis. There are microeconomic and macroeconomic principles in the simulation, and we will explain why these principles are categorized either microeconomic or macroeconomic. We will also identify at least one shift of the supply curve and one shift in the demand curve in the simulation. Lastly, we will discuss how the simulation gives a better understanding on how microeconomics and macroeconomics influence the supply and demand in the workplace.
Microeconomics/Macroeconomics
Microeconomics is the division of economics that examines the market performance of individual consumers and firms in an effort to understand their decision-making process (Colander, 2013). We look at how the people in Atlantis are affected by the supply and demand of the two bedroom rental apartments that GoodLife is renting to that community. Why the prices of the two bedroom apartments rise and how that affects the people of Atlantis. Macroeconomics is the division of economics that looks at the economy as a whole, rather than the individual markets (Colander, 2013). At the beginning of the stimulation, Atlantis was a small-populated community, and the public was interested in renting two bedroom apartments. However, when Lintech Inc. expanded into the Atlantis community, the demand of two bedroom apartments increased with the growing population. Also, the rise in salary influenced the demand for single-family homes (University of Phoenix, 2014).
Supply and Demand
During the supply and demand simulation, there were cases reflecting shifts in the demand and supply curve. A higher price is an incentive to provide more for the GoodLife company and influenced them to increase their rental rate and the decrease their percent of vacancies. The increase in rental rate would allow the company to cover their increase in costs for maintenance for the additional apartments. As the rent of the apartments increases, so does the number of apartment supplied, so this is an example of an upward slope in the supply curve (University of Phoenix, 2014).
The Atlantis Housing Survey provided statistics on the demand for two-bedroom apartments in Atlantis. GoodLife increased their rental rate, which gave them the incentive to lease more apartments. However, an increased rental expense also means a lower quantity demanded of apartments. Another factor that influenced the shift in demand was the changes in choice the community preferred in housing. The increase in salary caused a shift from apartments to single-family homes. Therefore, there are fewer potential tenants and the demand curve shifts to the left (University of Phoenix, 2014).
Equilibrium
The equilibrium throughout the simulation changed because of several factors. The impact of change in preferences of…