Microeconomic And Macroeconomics: A Simulation In Supply And Demand

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A Simulation in Supply and Demand
We can read about supply and demand and if we study it over a period, we can see it in action. However, by using the Supply and Demand simulator, we can see it work in action. We can watch the shifts of the supply curve and demand curve based on the various inputs. We can see how shifts affect equilibrium price, quantity, and decision making. From learning more about supply and demand, we can then apply what was learned. We can apply microeconomic and macroeconomic concepts to help with understanding factors that affect shifts. After gaining an understanding of these factors, we can better understand how price elasticity of demand affects a consumer’s purchasing and pricing strategy as they relate to …show more content…

It focuses on decisions that do not involve wide scale factors such as government or economic factors building up to the economy. This is a bottom up approach focusing on supplier costs and how the demand and therefore selling price is affected by availability.
Macroeconomics concepts help with understanding factors that affect shifts
Macroeconomics is the study of the economy as a whole and how larger forces affect an item’s selling price (Colander, 2013). It focuses not on individual decisions, but rather big picture factors such as inflation, unemployment, business cycles, and growth. This is a top down approach. In the scenario, the city has placed a cap on the price of housing. This affects the demand when there is a shift in the population requirements.
How price elasticity of demand affects a consumer’s purchasing and pricing strategy
Price elasticity of demand can be calculated by the percentage change in the quantity demanded divided by the percentage change in price. The larger number for price elasticity of demand means the quantity demanded is more responsive to the price (Colander, 2013). This information tells us how a quantity responds to a change in the price. In the scenario, we can see that by incrementing the price, the quantity demanded changes

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