Microeconomics and the Laws of Supply and Demand

In: Business and Management

Submitted By contrerasale21
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Microeconomics and the Laws of Supply and Demand In this paper we will be discussing the law of supply and demand. First of all, what is demand curve? Demand curve is the graphical representation of demand that shows the quantities consumers are able and willing to buy at various prices. A normal demand curve is downward sloping in accordance with the law of demand. Supply curve is also a graphical representation of supply that shows the quantities producers are able and willing to sell at various prices. A normal supply curve is upward sloping in accordance with the law of supply. Equilibrium is a state of balance where dynamic forces have canceled each other out and there is no tendency for change. The laws of supply and demand are the ones that determine our economy today. During the simulation it showed that the numbers affect dramatically towards the economy. “ For example, if the demand curve shifted to the left, it would show a decrease in demand from consumers and cause fewer apartments to be filled.” (Supply and demand Simulation, Linda R, July 21,2014) In this situation what happened is that due to a widespread desire of having property ownership and been forced from the management company to lower their prices for them to compensate. Equilibrium price becomes lower because the demand decreased, while the supply and the quantity remained the same. “If the supply curve were to shift to the right, it would indicate an increase in available apartments rent.” (Supply and demand Simulation, Linda R, July 21,2014) If management could expand the building there would be a way to accommodate more units. Let’s assume there was no change in demand, in this case the solution would be to lower the prices to achieve full occupancy of the building. It could have a very profitable decision and there could be enough demand to fill the new quantity. For example,…...

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