OPPapers.com

Supply And Demand Of Rental Properties In Atlantis

Supply and Demand of Rental Properties in Atlantis
Angela D. Nicol
University of Phoenix
ECO 365 Economics
Professor Nima Rasakhoo, PhD
Due Date March 16, 2009

Introduction
The Supply and Demand simulation involves acting as Property Manager for GoodLife Management that manages apartment complexes in Atlantis. This firm rents two-bedroom apartments on a month-to-month basis. The simulation will try to reinforce key concepts that the author is learning from the textbook. This is done by creating different scenarios where there is a change in the company’s supply and demand as it is related to the management’s direction, population changes, government regulations on ceiling price rates, and changes in the consumer’s preferences on housing size and style. This paper will discuss the entire simulation as well as define the key concepts being learned.
Simulation
The first section of the simulation was to assist GoodLife Management with the vacancy rate of the two-bedroom apartments that the company own in Atlantis. These apartments are occupied on a temporary month-to-month lease. The objective of this section is to maximize profits and at the same time reducing the vacancy rate from 28% to 15% and at the same time the company will reach higher maximum revenue. The rental price was reduced from $1300 to $950, by reducing the price this far increase the amount being demanded from 1200 to 1900. This leaves the company with a surplus of 100 apartments vacant and creates revenue of $1.81 million.
The second section introduced the concept of the supply curve where one had to explore what price would be required to lease out 2,500 apartments. This section employed the law of supply where “Quantity supplied rises as price raises, other things constant” (Colander 2008, p. 88). When the company raised the rental rate to $1550 per month, more two-bedroom apartments were able to be supplied. This shows that there is an upward slope in the supply curve.
The third...