Supply and Demand Simulation

The first simulation regarding supply and demand is illustrated in the real estate business where prices of the real estate affect how many people buy them

In the first scenario , the important thing for the company is to optimize the cost so that the occupancy rate will be high enough and that the revenue is maximized . In this case , the optimal solution would be to lower the cost from 1 ,300 to 950 . In this case , the demand will go up from 1 ,200 to 1 ,900 people . This illustrates the demand curve

p The second scenario dictates the need for all 2 ,500 apartments to be rented out . The company , however , needs to recover some of the costs that are necessary to maintain them thereby increasing the costs to 1 ,550 so that the company will be able to lease out all the rooms . This illustrates the supply curve

The two scenarios , however , create an imbalance , which is either a surplus of demand because of low prices or of supply because of high prices . The equilibrium of renting out 2 ,000 apartments to 2 ,000 people is met with the rental rate of 1 ,050

With the introduction of new variables , such as the increase in population , both the demand and the supply functions shift because of the inherent increase in demand and the increase in supply that is needed to match the demand . In this case , the rental rate will go from 1 ,150 to 1 ,300 to meet...