A product or service is valued differently by various customers. Some are willing to pay more than others to receive it. Movement along a demand curve involves changing the price of a product until the quantity of customers is just as much as Goodlife Management wants to sell. In year 1 of the simulation, Goodlife Management wished to lease more apartments that there were customers willing to pay the price that the company was charging. By reducing the price, Goodlife was able to attract more customers and make more revenue. However, reducing the price below a $950 per month actually reduced revenue for Goodlife Management. Since the goal was to maximize revenue and not to lease all of the apartments, Goodlife Management retained a 5% vacancy rate.
Movement along the supply curve works in the opposite direction. A company will incur extra costs to sell a greater quantity of products or services. So if Goodlife Management is to sell a greater quantity of products, they need to charge a higher price to be profitable.
In Year 3 of the simulation, Goodlife Management is investigating t
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