Supply and Demand Simulation Paper

1130 Words5 Pages
Supply and Demand Simulation Paper
Principles of Microeconomics 365
Matthew J. Angner
June 1, 2010
University of Phoenix Online

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
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109). The limit is usually below the equilibrium price. Price ceilings can cause issues in the equilibrium between supply and demand. If the price for the apartments were at the ceiling price, and the demand for the apartments increase, the supply would then begin to decrease. The simulation showed that this scenario escalated and the quantity demanded exceeded the quantity available and a shortage will continue.

Application of Supply and Demand Concepts The writer has a career as a Supplier Development Engineer in the Automotive Industry. The products produced include interior and exterior door handles and exterior mirrors. Although there are other automotive supplier’s who produce the same products, generally there are only a handful of these suppliers. Therefore, understanding the market for the products produced affects production on a supply and demand level. Changes in the economy in 2009 affected the production levels of our products. Vehicles were not selling, especially the larger SUV’s and truck platforms. Due to the decrease in demand, it created a surplus in the quantity of product on-hand. What did not occur, however, is a change in the price of the products. The product prices remained constant. What did change was the number of employees, which was reduced by 25% as well as a reduction in salaries for all employees. These reductions compensated for the pricing of the products not changing.
Price Elasticity of Demand “Price elasticity

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