The economy is easily said to be a fragile concept. It takes endless amounts of research and data to accurately foresee where the economy will be heading. Even then those assumptions would qualify best as educated guesses. There are tools though that can help adjust a business’s goals to the oncoming changes. For instance, in the simulation a supply and demand graph was used to illustrate what changes had come about and how the room rental business can adjust. The business was able to adjust to the economic shifts in demand and supply simply by applying this tool and gauging their prices. What characteristics of supply and demand can do this?
Supply and demand curves help quantify the markets value towards a good or service and how much of that good or service is available. The demand curve is a downward slope that measures the interest the consumer has towards the goods or service in question in relation to the price. In contrast, the supply curve is the upward slope that measures the amount of the goods or service available at a specific price. When the two are placed on a graph they form a relationship balancing the price of a good or service on a specific available amount in relation to the consumers’ interest. The simulation showed how they reach this equilibrium between the two slopes and why it is necessary.
The equilibrium point expresses the exact point where the quantity demanded equals the quantity supplied. If the price is set below equilibrium there would be a shortage in supply due to the overall demand increasing, an example of this would be a sale that is getting rid of surplus or outdated goods. If the price is set above the equilibrium there wo ...