Purchase Solution

# Supply and Demand Simulation

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What causes the changes in supply and demand in the simulation?

How do shifts in supply and demand affect your decision making?

List four key points from the assignments emphasized in the simulation.

How may you apply what you learned about supply and demand from the simulation to your workplace?

Determine how price elasticity of demand affects the consumerâ??s and the organizationâ??s decision-making.

Summarize your results of the assessment.

##### Solution Summary

Supply and Demand Simulation is clarified in this solution. References are also provided to further validate the findings.

##### Solution Preview

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Supply/Demand Simulation Response
You are the property manager that manages apartment communities depending on economic conditions you must set the rental rate and/or number of units to lease. For each simulation cycle explain what causes the changes in supply and demand in the simulation and how shifts in supply and demand affect your decision making....
Cycle #1 -
Vacancy rate of 28% is too high
What monthly rental rate brings this vacancy rate down to 15% \$1050
Why does this occur? With this rate, there were tenants for 1700 apartments; leading to a revenue of 1.79 million. However, a surpus of 300 apartments remain. When rental rate is reduced even further more potential tenants are willing to rent apartments leading to a lower vacancy rate per Susan's request. At a vacancy rate of 5%; I could maximize revenue of 1.81 million; with a surpus of only 100 apartments. The lower the rental rate, revenue initially increases, reaching the maximum at a particular rental rate and quantitity demanded, and then decreases.
Cycle #2 -
Rental rate at which all 2-bedroom units could be leased \$1,550
Rental rate at which quantity demanded equals quantity supplied \$1050
Is equilibrium a desirable market condition? Yes, equilibrium is a desirable market condition when there is no shortage or surplus and therefore, there is no incentive for the rental rate or the number of apartments to change.
Cycle #3 -
Lintech moves into area. Population desires housing
What happens to demand for apartments increases the demand
What happens to supply of apartments does not affect the supply
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