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Supply and Demand

Essay by   •  January 16, 2012  •  Essay  •  843 Words (4 Pages)  •  1,145 Views

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Introduction

Supply and demand is often misunderstood and under simplified. While many people think they can understand the intricacies of supply and demand, the ability to accurately do so often eludes them. Simply put when supply is high and demand is low the price is higher and vice versa. The ease of this understanding is so simple yet often misrepresented. The simulation showed that this is always the way, and the ease of understanding this was elementary.

Changes in Supply and Demand

In the simulation, the demand was often changed by the environment of employment and the businesses that were around the apartment complexes. While the amount of the apartments varied little, the demand changed rapidly at times. The many aspects of the supply and demand relationships caused decisions to be made based on many outside factors. While the ability to adjust was key, the ability to adjust with all the factors in mind and accurately judge the outcome took knowledge of these factors. The biggest cause for change in the supply and demand in the simulation was the new business that brought many new people and their families to the city.

Shifts and Their Affects

The shifts in the supply and demand affect the very fabric of what we base our decisions on. Typically, a business is interested in making money and the best way to do that is to see the supply and demand for a particular product or service and to then market it in a way that you can out sell or outperform the competition and then become successful and continue to thrive. When demand shifts up, you can allow for the price to go up and continue to charge that higher amount because the demand for the product is there to support cost. When the demand falls however, the rice must as well unless the supply falls as well. While these decisions are basic, the reports and findings to gain this knowledge are vital in any businesses survival. Many businesses use things like surveys and questionnaires to gain the public's opinions.

Four Key Points

The four key points that are hit during the simulation are; supply and demand, equilibrium, shifts in supply and demand, and price ceilings. The supply and demand was basically showing how that supply and demand are intertwined and that you cannot have the one without the other. The equilibrium is at which point the supply and demand is at its peak value and performance to allow for the maximum income. He shifts in the supply and demand are when outside forces shift the demand or the supply and therefore interrupt the ability for them to remain the same and therefore causing the structure to change and the equilibrium point to shift to another point. A price ceiling is where no matter what the supply and demand's interactions are, the ability to go over a set price is not

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