This means that the demand increase will produce an increase in supply at a controlled rate.
d. How can you apply what you learned about the concepts of supply and demand from the simulation to your workplace?
The simulation sheds particular light on the idea of adjusting pricing structure according to apparent market demand. This is useful to any workplace. In my case, the notion that large-scale external changes in the marketplace might bring about the need to make internal decisions within an organization seem particularly applicable. The simulation describes a scenario in which a company called Lintech makes its new home in Atlantis, bringing with it a boom in residency. The importance for a company such as Goodlife of preempting this infusion by increasing both price and supply is tantamount to accommodating rising demand. This is a scenario which applies to any organizational decision-making scheme predicated by market behaviors.
e. Determine how price elasticity of demand affects the decision making of the consumer and of the organization.
Using the simulation in question, we can see that there is a direct relationship between the apparent market demand and the decisions made an organization. For GoodLife,...
Here, the ability to engage price elasticity according to market demand will produce and improvement in revenues for the company on the whole. Using the simulation provided, we can observe that with two-bedroom apartment building rentals going for $11.75 per month, the vacancy rate initiates at about 27.5% and brings in an annual revenue of roughly $1.7 million.
Price elasticity allows us to actually improve revenue by lowering rental prices to meet the market threshold. In this case, we can dip below the benchmark of 18% vacancy, reaching 17.5% by adjusting the monthly rental rate to $1,075.00. We find that this improves overall revenue to $1.77 million annually.
f. Summarize your results of the assessment
The assessment ultimately produces the finding that many changes in the marketplace may occur over time, such as through the infusion of greater demand as produced by the influx of Lintech's residency or through the increase of supply as resultant from OakRidge's growing place in the market. These changes will impact how an organization makes decisions and postures itself in the marketplace.
