Cause of Supply and Demand

Cause of Supply and Demand

The cause for supply and demand in this simulation is caused by rental rate, reduction, reduce vacancy rate, and increase revenue. As Law of Demand describes inverse relationship between price and quantity demanded meaning higher prices raise the opportunity cost of purchasing a good. Consumers demand lower quantities and lower prices reduce the opportunity cost of purchasing a good; therefore consumers demand higher quantities. During year one as property manager for Good life property as decision maker I have decided in effort to reduce the vacancy rate the rental rate was reduced $1000 and the vacancy rate was reduced to ten percent. Although at rental rate of $1000 per month, there were tenants for 1800 apartment, leading to vacancy rate of ten percent and surplus of 200 apartments. The revenue at given rental rate was $1.8 million which was below the maximum possible dollar amount.

Shift in Supply and Demand

In scenario two of this simulation the shift in supply and demand has changed my decision from reducing the rental rate to increasing the rental rate as good life property management requested from local property managers to lease