Supply and Demand
Goodlife Management was the only firm in Atlantis that rented apartments. This gave Goodlife Management an advantage in the housing market. Detached rental homes owned by Oakridge Builders were the closest substitute to the apartment rentals. Without a substitute for rental housing in the Atlantis area, Goodlife Management maintained a monopoly in this market. Many factors cause changes to the supply and demand of a product or service. Companies need to make adjustments to pricing, supply, and demand to reach the equilibrium.
With a vacancy rate of 28% Goodlife Management made the decision to lower the rental rates decreasing the vacancy rate ...view middle of the document...
Although microeconomics and macroeconomics focus on different things, both allow a company to grow and succeed in the economy.
Supply Curve Shift
Income levels increased in the Atlantis area after the population increased. With the higher income levels many people preferred the detached home rentals to the apartments. The decrease in demand resulted in Goodlife Management converting some apartments to condominiums and selling the condominiums. The supply was also decreased and shifted to the left. To reach equilibrium Goodlife Management had to raise rental rates.
Demand Curve Shift
When the demand quantity increases and the supply quantity remains the same the rental rate increases to meet the new demand. More people demand the apartments but the supply remains the same causing the demand curve to shift to the right. Goodlife Management was not willing to lease the number of apartments demanded at the current rental rate. The company, however, was willing to lease the apartments demanded at an increased rental rate. The increase causes an upward movement along the supply curve. Increasing the rental rate decreases the quantity demanded and increases the quantity supplied allowing a reduction in the shortage. The adjustments continue until the point of equilibrium. The new equilibrium has resulted in higher rental rates, increased demand, and increased supply.
Supply and Demand at the Workplace
Understanding how supply and demand of a product effect each other and price allows each employee to make proper adjustments to meet the needs of the company and customers. When the supply exceeds the demand, prices will need to be reduced to reach equilibrium. When the...