edf40wrjww2CF_PaperMaster:Desc
Supply and Demand of Rental Properties in Atlantis
GoodLife Management is a company that is located in Atlantis (fictitious town). This company rents two-bedroom apartments on a month-to-month basis to the people living in Atlantis. In the simulation, it identifies the change in supply and demand of GoodLife’s rentals which are GoodLife’s management direction, population changes, implementation of price ceilings, and changes in consumer’s preferences. Several key points were mentioned in the simulation such as the demand and supply curve, equilibrium, and the impact of price ceiling. This paper will discuss the key points mentioned above and summarize the results of the simulation (University of Phoenix, 2008).
The first section of the simulation begins with the vacancy rate of two-bedroom apartments on temporary and month-to-month lease in Atlantis which is currently at 28%. The requirement in this section is to decrease the vacancy rate to 15% while maximizing revenue (University of Phoenix, 2008). The rental rate must be decreased to stimulate an increase in demand which employed Law of Demand application. Colander (2004) defines Law of Demand as “Quantity demanded rises as price falls, other things constant (p. 91, chap. 4).” The rentals for each apartment were decreased to $950 at which 1,900 apartments were demanded and thus leaving the surplus of 100. This maximizes the revenue to $1.81 million and the vacancy rate to result at 5% (University of Phoenix, 2008).
The second section of the simulation explored the impact of leasing out 2,500 apartments which employed the Law of Supply app ...