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9. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Average American household income Roundtrip airfare from Pittsburgh (PIT) to Atlantic City (ACY) Room rate at the Meadows Hotel and Casino, which is near the Oceans Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. PRICE (Dollars per room) Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 450 400 300 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Oceans's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from PIT to ACY (Dollars per roundtrip) Room Rate at Meadows (Dollars per night) 350 150 Initial Value $50,000 per year $100 per roundtrip $200 per night 50 100 200 Ⓡ For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $350 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Oceans from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Oceans are

9. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Average American household income Roundtrip airfare from Pittsburgh (PIT) to Atlantic City (ACY) Room rate at the Meadows Hotel and Casino, which is near the Oceans Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. PRICE (Dollars per room) Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 450 400 300 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Oceans's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from PIT to ACY (Dollars per roundtrip) Room Rate at Meadows (Dollars per night) 350 150 Initial Value $50,000 per year $100 per roundtrip $200 per night 50 100 200 Ⓡ For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $350 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Oceans from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Oceans are

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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9. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Average American household income Roundtrip airfare from Pittsburgh (PIT) to Atlantic City (ACY) Room rate at the Meadows Hotel and Casino, which is near the Oceans Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. PRICE (Dollars per room) Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 450 400 350 300 250 200 150 100 50 Demand d 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Oceans's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from PIT to ACY (Dollars per roundtrip) Room Rate at Meadows (Dollars per night) 350 150 Initial Value $50,000 per year $100 per roundtrip $200 per night 50 100 200 Ⓡ For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $350 per room per night. from rooms per night to rooms per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Oceans Therefore, the income elasticity of demand is Oceans are , meaning that hotel rooms at the
Transcribed Image Text:9. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Average American household income Roundtrip airfare from Pittsburgh (PIT) to Atlantic City (ACY) Room rate at the Meadows Hotel and Casino, which is near the Oceans Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. PRICE (Dollars per room) Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 450 400 350 300 250 200 150 100 50 Demand d 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Oceans's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from PIT to ACY (Dollars per roundtrip) Room Rate at Meadows (Dollars per night) 350 150 Initial Value $50,000 per year $100 per roundtrip $200 per night 50 100 200 Ⓡ For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $350 per room per night. from rooms per night to rooms per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Oceans Therefore, the income elasticity of demand is Oceans are , meaning that hotel rooms at the
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