ECO365 Week 2 Simulation Essay Example
ECO365 Week 2 Simulation Essay Example

ECO365 Week 2 Simulation Essay Example

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  • Pages: 2 (504 words)
  • Published: August 10, 2017
  • Type: Analysis
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The simulation focuses on the supply and demand of rental properties. It incorporates principles from both microeconomics and macroeconomics, including shifts in supply and demand curves. It explores how supply and demand impact the workplace and how consumer purchasing and firm pricing strategies are influenced by price elasticity of demand. In terms of microeconomics, an example in the simulation involves Good Life Property adjusting their rental rates for flats, a business decision. Another example relates to the allocation of inventory for lease purposes. On the other hand, macroeconomics deals with decisions made at a larger scale. In this simulation, adding income through Lintech and implementing a rent cap resulted in changes to both supply and demand curves. These adjustments can be seen as an increasing line on the graph representing flat prices and quantities purchased.Lintech's


entry into the market caused a leftward shift in the supply curve, indicating decreased availability due to increased demand. The graph visually represents the relationship between price and demand, illustrating how the demand curve behaves in this simulation. An increase in rent led to a leftward shift in the demand curve, signaling a decrease in demand. Price elasticity is notably high in some industries, such as crude oil.

The amount of work required from daily workers varies depending on consumer demand, ranging from 12 hours on certain days to eight hours on others. If there is a shortage in supply, it would negatively impact companies that are already customers. Additionally, this shortage could temporarily increase monetary value, whereas a general increase in oil prices may result in a long-term rise in monetary value.

To comprehend how supply and demand influence the economic

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system, understanding both macroeconomics and microeconomics is necessary. Companies determine the lifespan of their products based on their level of demand. The optimal point for a product or service occurs when supply and demand intersect at equilibrium.

Consumer purchasing behavior and firm pricing strategies are influenced by the price elasticity of demand. Alterations in product price can lead to changes in customer buying habits. In cases where there is an increased demand for a specific apartment, landlords have the opportunity to raise rent rates to capitalize on this higher demand; however, customers may decrease their purchases if rent rates become too high.Customers may opt for traditional homes instead of alternative housing options as a result. The impact of price elasticity of demand on consumer purchasing behavior and pricing strategies is evident to companies. High prices can hinder potential profits. Supply and demand charts are useful in determining the optimal price for products or services, as shown by Good Life's successful enhancement of net income and optimization of rental rates using these curves. This approach is particularly effective in the crude oil industry, where supply and demand directly affect prices. When establishing prices, it is crucial to consider price elasticity. The source for this information is D.C. Colander's book "Economics" (8th ed.), retrieved from The University of Phoenix eBook Collection database on April 11, 2013.

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