Basic Concepts Paper

Basic Concepts Paper

• Running Head: Running Head: Basic Concepts Paper

University of Phoenix
ECO/415 APPLIED ECONOMICS IN BUSINESS
June 27, 2011

Basic Concepts Paper

Introduction
The supply and demand simulation was based on the management of rental apartments
by GoodLife Management. The apartments are in a fictitious town called Atlantis. Topics
that will be reviewed in this paper include changes in supply and demand, how shifts in
supply and demand affects decision-making, key points from the reading assignments
that were emphasized in the simulation, application of the supply and demand concepts
at the author’s workplace, how price elasticity of demand affects the decision-making of
the consumer and to the organization, and a summary of the results of the assessment.

1. What causes the changes in supply and demand in the simulation?
Factors that affect supply and demand in the simulation are driven by the availability of the 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. In the simulation, as the price decreased, demand increased. The supply curve, on the other hand, is upward sloping. 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 apartments exerts an upward pressure on the price. To maintain the balance of quantity demanded and the quantity supplied, GoodLife would need to raise the prices.
2. How do shifts in supply and demand affect your decision making?
Shifts in supply and demand in the simulation were caused by several factors. Changes in the direction of GoodLife Management and the population changes within Atlantis and outlying areas had an affect on supply and demand in the simulation....