Supply and Demand
Supply & Demand
Eco/365
December 17, 2012
Various factors, including fluctuations such as increases or decreases in prices, can cause a change in supply and demand as well. This paper will attempt to discuss different economic principles and factors and how they are affected by change. In the current situation, GoodLife Management manages seven rental properties in the city of Atlantis, and over the course of 7 years has to be flexible with its pricing due to changes in demand.
Economics is literally defined as “the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of society” (Colander, D.C., 2010). Simply put, economics focuses on three things: 1) what, and how much, to produce; 2) how to produce it; and 3) who to produce it for. Microeconomics is the study of individual choice, and how that choice is influenced by economic forces; while macroeconomics is the study of the economy as a whole (Colander, D.C., 2010).
When looking to microeconomic principles, scarcity is the first that comes to mind. The more scarce a service or product, the more the supplier will be able to charge for it. In the situation at hand, when the influx of employees began coming to Atlantis, GoodLife was able to raise the prices of their apartments. Consumers had the choice of whether to rent the apartment for the price given, or go to a neighboring town, where the price might not be as high. A rise in the population of Atlantis led to a greater demand for housing. This in turn contributed to the rise in rental prices. Next would be opportunity costs, which is the “benefit that you might have gained from choosing the next-best alternative” (Colander, D.C., 2010). Again, this comes down to consumer choices. If someone could live in a neighboring town and pay less rent, they would have a longer commute; whereas if they lived in Atlantis in the GoodLife apartments,
Eco/365
December 17, 2012
Various factors, including fluctuations such as increases or decreases in prices, can cause a change in supply and demand as well. This paper will attempt to discuss different economic principles and factors and how they are affected by change. In the current situation, GoodLife Management manages seven rental properties in the city of Atlantis, and over the course of 7 years has to be flexible with its pricing due to changes in demand.
Economics is literally defined as “the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of society” (Colander, D.C., 2010). Simply put, economics focuses on three things: 1) what, and how much, to produce; 2) how to produce it; and 3) who to produce it for. Microeconomics is the study of individual choice, and how that choice is influenced by economic forces; while macroeconomics is the study of the economy as a whole (Colander, D.C., 2010).
When looking to microeconomic principles, scarcity is the first that comes to mind. The more scarce a service or product, the more the supplier will be able to charge for it. In the situation at hand, when the influx of employees began coming to Atlantis, GoodLife was able to raise the prices of their apartments. Consumers had the choice of whether to rent the apartment for the price given, or go to a neighboring town, where the price might not be as high. A rise in the population of Atlantis led to a greater demand for housing. This in turn contributed to the rise in rental prices. Next would be opportunity costs, which is the “benefit that you might have gained from choosing the next-best alternative” (Colander, D.C., 2010). Again, this comes down to consumer choices. If someone could live in a neighboring town and pay less rent, they would have a longer commute; whereas if they lived in Atlantis in the GoodLife apartments,
References: Colander, D. C. (2010). Economics (8th ed.). New York, NY: McGraw-Hill. Investopedia (n.d.) Economics Basics: Demand and Supply. Retrieved from Investopedia.com, http://www.investopedia.com/university/economics/economics3.asp#axzz1x3HdbLol