Answered: Addition/improvement of amenities:…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 7MC

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Addition/improvement of amenities: (Demand curve shifts right, equilibrium price and quantity increase.) Potentially increased demand: Enhanced value proposition attracts guests seeking specific features. Possible increase in revenue: Higher perceived value might justify slightly higher pricing. Removal/downsizing of amenities: (Demand curve shifts left, equilibrium price and quantity decrease.) Potentially decreased demand: Guests seeking specific features might choose competitors with better offerings. Possible decrease in revenue: Reduced value proposition could make Candlewood Suites less competitive. Why: Amenities directly impact guest experience and perceived value. Adding or improving amenities can attract new guests and justify higher prices. Conversely, removing or reducing amenities can make Candlewood Suites less appealing and lead to lost revenue. Draw supply and demand curve for each of the above cases. Also, draw shifts in supply and demand curve for each. ADR vs Number of Rooms Sold. MAKE SURE IMAGE OF THE GRAPH SHOWS UP CORRECTLY

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