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¶ … business environment cause changes in supply and demand? Cite and explain at least two examples from the simulation.
Changes in the business environment increase or decrease supply and demand under different circumstances and assumptions. If the change in the business environment aims at reducing the cost of the product or service under demand and supply study, it has the influence of increasing the quantity demanded (Mungui-Pupazan, 2009). This entails that the quantity of commodities consumer is willing and able to pay for increases with a decrease in the cost of the products or services available at their disposal. Quantity demanded would exert much pressure on the few commodities if a producer is willing and able to supply in order to much the needs of the market. This forces the price to increase in order to reduce the shortage in the market. From the simulation, GoodLife reduces the rental rates in order to increase the quantity demanded. This decrease in cost increases the number of consumer willing and able to acquire the apartments in place. The increase in demand reduces the vacancy rate and increases the volume of revenue to the firm. This has a downward pressure on the available apartments since the quantity supplied is in excess of the demand level in the market. This force the firm to limit the quantity supplied to reduce the surplus in the apartments market. If the GoodLife Company decides to increase the rental rates, then the quantity demanded would decrease causing upward increasing the surplus level in the market. This would force prices to decrease since the vacancy rate would increase resulting in to minimal revenue accumulation (Wessels, 2006). The supply of the apartments would decrease since few consumers would be willing and able to acquire the commodities at the current market price. Prices would decrease to a certain level to a point where producers would not be willing to supply their products. This causes shortage hence increase in price and supply of...
The marginal analysis economic model or principle offers the most rational way to decide whether to continue with the proposal of a marginal change or adopt a different measure. The firms have the capacity to determine the best option available to improve their current condition within the market. Such decisions increase the level of productivity or total revenue while minimizing the cost because they are rational in approach. Since marginal analysis is rational and depicts the cost and benefits of the change, it is ideal for making business decisions. The decision adoption is on the best option in relation to the revenue and cost, in the process of implementation. From the simulation, the GoodLife conducts the marginal analysis of the benefits of decrease in the rental rates from 28% to approximately 15%. The effect of this change according to the marginal analysis involves an increase in demand, decrease in the vacancy rates, and improvements on the revenue levels. This indicates that the approach is the best move to revive the stagnation of the company to profit and revenue orientation. The company can adopt the outcome of the marginal analysis to make the right decisions in lowering the rental rates. The eventual benefit of this measure is the increment on the total revenue of the firm with minimal costs thus increases in profit levels (Gans, 2011).
How did your team determine appropriate output levels in the simulation? Cite at least two examples. Were your team's output decisions successful? If so, explain specifically how your decision making process led to financial success. If not, identify any mistakes and explain what…
References
An Empirical Estimation of the Factors Affecting Demand and Supply of Poultry Meat. (2010). Pakistan Veterinary Journal, 30(3), 172-174.
Baumol, W.J., & Blinder, A.S. (2012). Economics: Principles and policy. Mason, OH: South- Western Cengage Learning.
Black, J., Hashimzade, N., & Myles, G.D. (2009). A dictionary of economics. Oxford: Oxford University Press.
Gans, J. (2011). Principles of economics. South Melbourne, Vic: Cengage Learning.
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