This simulation of “Applying Supply and Demand Concepts” gave me a true understanding of how things work in the market place. We go through life dealing with these situations, but not knowing how they really affect us and the world around us. I had some ideas of how these principles worked, but was I taken for a loop when I tried to balance out the equations. This is what I learned from this simulation and how it applied to real-world occurrences. Two Macroeconomic and Microeconomic Principles The two principles that I found that related to the simulation for microeconomics were supply and demand, and scarcity.
These two principles both have a direct effect on what a people will do, on a personal level, when it comes to their economic decisions. The simulation showed what would happen if more positions became available and people came to fill those positions. This caused a scarcity of living spaces which in turn caused a shift in the supply and demand curve. When looking at two principles that are related to the simulation for macroeconomics, I found that the use of government restrictions on rental prices and economic growth had the most effect.
These two items had a greater external influence on population growth than what could have happened with the microeconomic principles. Identify one shift of the supply curve and one shift of the demand curve. When discussing a shift in the supply curve in reference to the simulation the shift was caused when there was an increase in income for the population because of the increase of new jobs. The simulation also showed that the supply curve decreases, and it shifted to the left because the renters wanted a detached rental versus being in an apartment complex.
When the population increases then the demand curve will shift. This was caused by the large stream of other companies moving into the area. So, with more population also came a shortage of available apartments, which caused the demand curve to shift to the right. How does each shift affect the equilibrium price, quantity, and decision making? When analyzing the demand curve, see if the supply curve is constant, if it is, then a shift to the left will decrease the equilibrium price, and it will also increase the quantity demanded. The opposite will happen if there was a shift to the right of the demand curve.
The influences on the supply curve, if the effects on the demand curve are constant, would also have an opposite effect. This will cause a shift to the left, and it will increase the equilibrium price, and also it will decrease the quantity demanded. The outcome of this is that as price’s increases, the demand will decrease regardless of what combination of shifts that might occur. How can I apply what I have learned from the simulation to my workplace? One of the bestselling products at Vi-Jon is their Germ-X Hand Sanitizer. They make this product every day, 24 hours a day.
During the flu season, it is supply and demand. We make as much product as we can, even to the point of bringing in extra people on off-shifts to make sure that we can meet our customer’s demand. It is also their most profitable time of the year, and this generates revenue to support the company during the time they are out of the flu season. During the flu season, our prices are higher on this product to support around the clock coverage. During the off seasons, our prices are lower. This also plays into the winter shutdown for two weeks during the holidays.
This allows the plant to do needed maintenance and still fulfill their customer’s needs. How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? When discussing supply and demand the premise is based on some sort of market expectation. These shifts of curves are trying to find a way of neutrality between companies and their consumers. The key is to find a medium, in reference to price, that their customers would not mind paying, whereas the company would have no problem selling their products.
Once the company has reached that point of equilibrium, where they can sell their product and the customers do not mind paying that price, then they have a positive arraignment for both. How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? When looking at the concepts of macroeconomics, they have helped me to understand that there will always be external factors that will affect cost, supply and demand.
What I have learned from the simulation is that the government can come in and adversely affect prices by putting a ceiling on what the market can charge. It also can cause companies to change their formats in order to adjust to these changes, like from apartments to condos. This way, the government can meet the demands of the population by limiting the cost that the companies can charge consumers, and opening up areas where new jobs can open and flourish. Relating to the simulation, explain how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy.
I have learned from this week’s reading that “price elasticity is the percentage change in quantity divided by the percentage change in price. (Colander, 2010)” What this boils down to is how companies understand the receptiveness of their customers to changes in prices. In the simulation, Good Life had to constantly adjust to the changes in the market in reference to availability, competition, and government control. They needed to remain competitive, but also increase revenue during some volatile times. By using this formula, they were able to adjust and continue to grow in an ever changing market.