Supply and Demand Simulation

983 Words Jan 23rd, 2013 4 Pages
ECO365
Supply and Demand Simulation
Student Name
ECO/365 – Principles of Microeconomics
Instructor Name
Date
Introduction

Supply and Demand is a phrase that every one hears in one way or another, Supply and demand phrase according to Colander, (2010) is the most used phrase by economist and the reason is because the phrase provides a good “off-the-cuff” answer for many question that have to do with economy. Example why are interest rates to Low? Because supply and demand. Why is Gasoline so high? supply and demand. This paper will speak about a simulation found on University of Phoenix student website, simulation named “Applying Supply and Demand Concepts” This paper will speak about macroeconomics and microeconomics
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Understanding the concepts of macroeconomics and microeconomics help understand factor that affects shifts in supply and demand because now one can see with clarity what are the categories and what those categories are, the ones influence supply and demand and how this same factor may bring equilibrium.
Price Elasticity of Demand
According to Colander (2010), the price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. As for this simulation, if the demand experiences a negative percentage change (if it decreases) the price of renting an apartment will also decrease. So, rental rate will decreases as the demand decreases. On the other hand, when the supply decreases or increases, the rental rate will remain constant. If the demand increases, the rental rate will be increased, since more people will want apartments (the company is able to increase the prices – the law of demand).
According to Colander (2010) Price Elasticity of Demand can be defined as “the percentage change in quantity demanded divided by the percentage change in price:

Conclusion
This paper has referred to various terms from the macroeconomic and microeconomic environment. It has analyzed trends and also shifts of the supply and demand curve for a company that rents two-bedroom apartments in Atlantis. The paper has also referred to situation from the real world where microeconomic concepts can be applied. Last, it has

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