Supply and Demand Simulation
The week two simulation "Applying Supply and Demand Concepts" places the student into a situation regarding the supply and demand for housing in the imaginary city of Atlantis, then has the student make decisions based off of the information provided. During the course of the simulation the tasks set before the student are to identify the causes of the supply and demand shifts explained in the simulation, identify the affect the shifts have upon the decision making process, list four key points from the weeks readings, apply those concepts to the students own work environment then summarize all the results of the simulation.
The first task presented to the student is to adjust the rental rates of the two-bedroom apartments to lower the vacancy rate to less than 15% while maximizing revenue. Taking this into account the best course of action was to adjust the monthly rent to $950 dollars per month; this action lowered the vacancy rate to a mere five percent and maximized revenue at $1.81 million for the year. It was noted in the simulation that there was still a surplus of 100 apartments and had the task been to lease all apartments, lowering the rent further would have been sufficient.
The second task presented in the simulation was to assess the possibility of leasing all the apartments at the current rate, and to find out the rate at which leasing all the apartments would cover maintenance costs and remain profitable to the company. The rate of $1550 per month was found to be the ideal rate to lease the apartments and still maintain a profit after the cost of maintenance for the complexes.
The third task presented to the student is to find the rental ...