Supply and demand is a vital portion of any business concept, and both come into play when attempting discuss economics as a whole. During the supply and demand simulation it displayed how the Good Life Management Co. located in the fictitious city of Atlantis is impacted by an excess of fluctuating supply and demand fiscal matters. For the Good Life Management Co. the fluctuations in the equilibrium come from changes within the supply and demand of their units. The supply and demand factors will only have an impact on the business that they are pertinent, and in this case it is the business of apartments. Macroeconomic concepts are classified as price elasticity and price ceilings. (Colander 2013) The reasoning for this classification is …show more content…
For instance, when the demand was shifted to lower demand, it caused there to be a decrease in need or demand from consumers for the companies apartments; which means that there are less people seeking to purchase an apartment. With the decrease in need for the apartments, management was forced to lower the prices of the apartment to compensate the lack of interest in the apartments. When the demand was decreased, the equilibrium price also became lower. With this part of the simulation however, the supply and quantity of the actual apartments was not …show more content…
During the simulation, it showed that if the company wanted to be successful, they will need to set their pricing structure in conjunction with the demand of their units. If a company has an overabundance of a specific product and the demand is not present, the pricing will need to be adjusted to supplement the overabundance. Throughout the simulation, there was many times that the apartment company had to change their pricing or supply model to accommodate the demand set forth.
There are several sectors of macroeconomics that can play a significant role in equilibrium and quantity. For instance, if the government places a price ceiling on a product, it can limit the amount of money the charging agency can charge for a product. (Taylor 2006) Some may think that the price ceiling is set to prevent agencies from making too much money, but it can serve an important purpose in protecting the consumers from having to spend inordinate amounts of money for a product. As the economics factors of the situation change, there are many items that will see changes to the
From classroom to a cocktail party, having knowledge in today’s economics is definitely an asset when it comes surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta undeniably satisfies as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven.
A theme that dominates modern discussions of macro policy is the importance of expectations, and economists have devoted a great deal of thought to expectations and the economy. Change in expectations can shift the aggregate demand (AD) curve; expectations of inflation can cause inflation. For this reason expectations are central to all policy discussions, and what people believe policy will be significantly influences the effectiveness of the policy.
Mastrianna, Frank V., and Thomas J. Hailstones. Basic Economics. 11th ed. Cincinnati, Ohio: South-Western College Pub., 1998. Print
All consumers should aware themselves of the factors involved with price elasticity and how the traits potentially impact their purchases and personal or commercial budgets. Commercial firms have the problem of managing price elasticity with their products and prices and governments have a constant problem of determining taxes from price elasticity. I used three examples to attempt solving how firms manage their products with price elasticity factoring with Proctor & Gamble, the oil, and airline industries. I used government examples of how the attempts to collect data to formulate their policies for taxation on elastic and inelastic products while also describing how the US Postal Service uses price elasticity to compete with corporate competition. Exposure to these factors of price elasticity will generate consumers’ awareness of firms and governments role to determine goods or services at a particular price.
In Book V of his Principles Alfred Marshall describes what he denominated “the state of arts” of the supply and demand theory, going back to Adam Smith. The assumptions then applied to the matter was that 1) demand comes first, 2) it is up to sellers to adjust supply to demand through production and marketing, a mix where the price is the most important variable, and 3) production takes time. Marshall summarized statement 2 later on into a single phrase: “Production and marketing are parts of the single process of adjustment of supply to demand” (MARSHALL, 1919, p. 181). This set of three assumptions suggests that the basic principles of the supply and demand theory collected by Marshall from the work by some scientists were then laid, requiring therefore only the right mathematical treatment.
“Microeconomics and macroeconomics can be described in terms of small-scale vs. large-scale or in terms of partial vs. general equilibrium. Perhaps the most important distinction, however, is in terms of the role of equilibrium. While issues in microeconomics seldom challenge the notion of a naturally occurring equilibrium, the existence of business cycles and, especially, unemployment suggests too many observers that macroeconomics raises issues of a different character.” (McConnell & Brue, 2004).
In this report, I will be distinguishing Demand and Quantity Demanded by stating the differences between both terminologies. By referring to the textbook which we are using throughout our course plus resources from the internet, I have been able to collect some information about the definitions of demand and quantity demanded. The factors which affect the movement along the curve and shifting of the curve have been stated in the following pages in this report. Demand and Quantity Demanded are different in terminologies and also literally. The demand and quantity demanded curve has differences and it can be seen in the figures which I had pasted below.
As the supply curve moves in the automobile industry, the equilibrium price and quantity sold will change with this shift. When the automobile manufacturers see this shift in supply, they will then raise their prices and the quantity sold will fall. Car manufacturers will also develop...
The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the amount of goods that buyers are willing and able to purchase at various prices, assuming all other non-price factors remain the same. The demand curve is almost always represented as downwards-sloping, meaning that as price decreases, consumers will buy more of the good. Just as the supply curves reflect marginal cost curves, demand curves can be described as marginal utility curves. The main determinants of individual demand are the price of the good, level of income, personal tastes, the population, government policies, the price of substitute goods, and the price of complementary goods.
Supply and demand is one of the most simple-looking aspects of an economy and its study, but yet it presents the greatest challenge to analysts. Although most events can be mathematically calculated to perfection, the human aspect always intervenes and throws off a calculation. Dealing with the imperfections of psychology differentiates a modern analyst with initiative over one who follows an equation.
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).
In the absence of government intervention, price is determined by demand and supply. The equilibrium price is where demand and supply are equal. At this point there are no forces causing the price to change. The quantity which consumers want to buy will equal the quantity which producers want to sell at the current price.
It is inside of the human beings nature to trade with each other since their apparition there are million of years. From the middle age to nowadays societies, the use of the currency as mean of trade become popular among societies and more people were able to establish commerce of different articles. Having Decided to open a small ice cream stand on campus called “Ice-Campused” to apply my business and economical skill I noticed that there are days where ice creams remain unsold but other days where there are not enough ice creams for the number of customers. Knowing that Fluctuating Demand corresponds to the demand in the commerce sector, which rises and falls sharply in response to changing economic conditions and consumer spending patterns there are several factors, which cause the shifts in demand.
...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.
Rittenberg, L. and Tregarthen, T. (2012). Macroeconomics Principles V. 2.0. Licensed under Creative Commons by-nc-sa 3.0 (https://creativecommons.org/licenses/by-nc-sa/3.0/)