Supply and demand affect all consumers and manufacturers, although the forces are not always obvious everyday thoughts. University of Phoenix’s law of supply and demand simulation allows for the practice of necessary adjustments affecting supply and demand curves. The simulation provides an opportunity to monitor real life factors, both microeconomic and macroeconomic, in maintaining equilibrium for the service industry of apartment rental. In a review of the simulation, macroeconomic factors shown includes population growth and price ceilings. Whereas, microeconomic factors consist of rental prices of apartments as well as the cultural and social effect of purchasing detached homes instead of renting. Micro and Macro Elements When new industry …show more content…
Suppliers shift the inventory supply to meet additional consumer desires. As growth deposits more income into the society, the cultural shifts to more permanent setting and choosing detached homes for purchase over renting a temporary apartment space. With this market shift, Goodlife must adjust their strategy to meet the current market demands. The increase in purchase preference over rental preference lowers the demand for rental property. Lowering lease prices is a means of market stimulation to entice consumers to rent rather than buy. As the demand continues to fall, service providers change the scope of property available by renovating rental properties into purchasable …show more content…
Population growth increases the demand for apartments shifting the demand curve upward. Project development is needed to increase the supply of apartments. When the demand increases and supply provided remains the same a shortage results. Lowering rental rates increases demand providing an upward shift in the demand curve. Higher prices and competition of detached housing available for sale shifts the demand downward. Goodlife purchasing and developing more rental properties increases the number of apartments available for rent resulting in an upward shift in the supply curve. As the market preference changes to purchasing detached homes rather than renting apartments, Goodlife’s renovation of converting a rental property into sellable condos shifts the supply curve. This renovation increases the supply of housing for sale moving this supply curve upward while lowering the supply of rental property. On the rental property supply and demand scale, the supply curve has experienced a downward shift. As the supply and demand curves shift over time, management provides adjustments in the rental rates to maintain