Applying Supply and Demand Concepts

1027 WordsMay 25, 20135 Pages
Applying Supply and Demand Concepts David Hodge ECO 365 April 29, 2013 Robert Watson Applying Supply and Demand Concepts The supply and demand simulation was a very helpful tool in understanding the effects of external factors on the supply and demand curves. Understanding this concept is fundamental in preparing for real life situations. I personally enjoyed the fact that the simulation was based on a real estate management company. I was able to understand and relate to the information given. There are a series of questions that will be answered and the topic of this paper will cover different concepts of micro and macroeconomics including; shifts in the supply and demand curves and its effect on the equilibrium price,…show more content…
* Supply and demand is based on a certain level of market competition. The shifts of these curves are an attempt to find a common ground between businesses and their consumers. They strive to find a price to which the consumers would be willing to spend their money and at a level of which the company would be willing to sell their products. Once this level is reached equilibrium of price and quantity demanded is created and they no longer push against each other, both parties are happy. * * How do the concepts of macroeconomics help you understand the factors that affect shifts * in supply and demand on the equilibrium price and quantity? * The concepts of macroeconomics help me understand that there are external factors that will affect the end users. For an example, in the simulation, the consumer’s decision making process will be altered based on the property management’s decision to convert some of their apartments to condos. Also, the increase in population and the government mandates will have the effects as well. * * * * Relating to the simulation, explain how the price elasticity of demand affects a consumer’s * purchasing and the firm’s pricing strategy. According to the text, “price elasticity is the percentage change in quantity divided by the percentage change in price. (Colander, 2010)” Basically, what this aims to define is the responsiveness of their consumers to price change. This calculation
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