Supply and Demand

1. The simulation illustrates a number of different economic concepts. The relationship between supply, demand and price is highlighted. The simulation shows what happens under normal conditions when the price of a good changes. For example, when the price increased the supply of the good increased but the demand fell. As a result, the market was no longer in a state of equilibrium (Riley, 2012). Thus, the concept of supply-demand equilibrium was identified. This is a microeconomic concept, following from the definition of microeconomics as the study of economics relating to individual decision-making (NetMBA, 2010).

Price elasticity of demand is a Theory of the relationship between a change in the quantity demanded of a

Elasticity of demand is the relationship between the demands for a product with respect to its price. Generally, when the demand for a product is high, the price of the product decreases. When demand decreases, prices tend to climb. Products that exhibit the characteristics of elasticity of demand are usually cars, appliances and other luxury items. Items such as clothing, medicine and food are considered to be necessities. Essential items usually possess inelasticity of demand. When this occurs prices do not change significantly.

The price of rentals decreased to create less quantity that is available for rent creating an equilibrium and decrease in surplus. This is a hard decision to lower the price significantly but will continue to create revenue for the property management company while decreasing supply of vacancy.

This week’s assignment examined the effects of supply and demand on the pricing and availability of real world goods. In this instance, the simulation looked at pricing and availability of two bedroom apartments in the fictional city of Atlantis. The simulation takes a look at several different situations, outside market factors and governmental influence. By going through the simulation and adjusting the pricing levels of the apartments and the number that are being made available to be rented, the simulation shows the effects of things like new employers moving into the area, rent control laws being put into effect and the

2. Microeconomics – the branch of economics, which deals with the individual decisions of units of the economy – firms and households, and how their choice determine relative prices of goods and factors or production.

Describe what has occurred to change the demand for, or the supply of, the good or service, and market prices of those products or services

Price elasticity of demand is an economic measure that is used to measure the degree of responsiveness of the quantity demanded of a good to change in its price, when all other influences on buyers remain the same.

When price elasticity of demand is elastic, the coefficient will be greater than one. When a percent price change occurs quantity demanded responds strongly there will be a large change in quantities consumers purchase. There is price sensitive in this scenario. If price elasticity of demanded is inelastic the coefficient will be less than one. When a percent price change occurs quantity demanded does not respond strongly then there is a slight change in quantities consumers will purchase. There a weak price sensitive in this scenario. Lastly, if price elasticity of demanded is unit elastic the coefficient will be equal to one. Whenever there is a percent change in price there is an equally matched percent change in quantity demanded. This scenario is rare.

Elasticity of demand - refers to the sensitivity of demand to a change in price. The more sensitive demand is (i.e. the more it changes) to a price change the more elastic it is said to be.

Firstly, demand represents the popularity of a certain good or service and so has a strong relationship with the quantity supplied. Price, however,

A market is an environment where buyers and sellers interact to exchange goods, the price for which are determined by both the supply and demand for them. ‘A market uses prices to reconcile decisions about consumption and production’.¹ The supply/demand model helps to explain how the market works and gives a greater understanding of actual market behaviour. Therefore, analysis of this concept can be used to develop economic and business decisions and policies. The purpose of this assignment is to outline the basic elements of the model and discuss its usefulness in understanding actual behaviour in the market place.

Singapore based hoteliers are doing brisk business in London, for the period of the upcoming London Olympic Games. This article was published on 25 June, 2012 written by Yasmine Yahya on The Straits Times newspaper. Which 95% of the rooms of The Ascott, Millennium & Copthorne Hotels (M&C) and Frasers Hospitality were booked. The games had actually started on 27 July, 2012. In addition, GuocoLeisure will also have benefit like for example 5,000 rooms located in London City. To add on with it, the London Olympics Council pre-booked more than 60% of the rooms in London for the Olympics participants and leaving the rest of the revellers scrambling to the remaining rooms that are

What would you expect to happen to spending on food at home and spending on food

Singapore based hoteliers are doing brisk business in London, for the period of the upcoming London Olympic Games. This article was published on 25 June, 2012 written by Yasmine Yahya on The Straits Times newspaper. Which 95% of the rooms of The Ascott, Millennium & Copthorne Hotels (M&C) and Frasers Hospitality were booked. The games had actually started on 27 July, 2012. In addition, GuocoLeisure will also have benefit like for example 5,000 rooms located in London City. To add on with it, the London Olympics Council pre-booked more than 60% of the rooms in London for the Olympics participants and leaving the rest of the revellers scrambling to the remaining rooms that are