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Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $200 per night 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. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Triple Sevens's Hotel Rooms 500 Price (Dollars per room) 150 50 400 Quantity Demanded (Hotel rooms per night) 350 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 40 Demand 100 Airfare from LAX to LAS (Dollars per round trip) Room Rate at Exhilaration (Dollars per night) 100 50 50 100 150 200 250 300 350 400 450 500 200 QUANTITY (Hotel rooms) PRICE (Dollars per room)

Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $200 per night 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. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Triple Sevens's Hotel Rooms 500 Price (Dollars per room) 150 50 400 Quantity Demanded (Hotel rooms per night) 350 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 40 Demand 100 Airfare from LAX to LAS (Dollars per round trip) Room Rate at Exhilaration (Dollars per night) 100 50 50 100 150 200 250 300 350 400 450 500 200 QUANTITY (Hotel rooms) PRICE (Dollars per room)

Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
ChapterA: Working With Diagrams
Section: Chapter Questions
Problem 8QP
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Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $200 per night 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. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Triple Sevens's Hotel Rooms 500 450 Price (Dollars per room) 150 400 Quantity Demanded (Hotel rooms per night) 350 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 40 Demand 100 Airfare from LAX to LAS (Dollars per round trip) Room Rate at Exhilaration (Dollars per night) 100 50 0 50 100 150 200 250 300 350 400 450 500 200 QUANTITY (Hotel rooms) PRICE (Dollars per room)
Transcribed Image Text:Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $100 per round trip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $200 per night 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. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Triple Sevens's Hotel Rooms 500 450 Price (Dollars per room) 150 400 Quantity Demanded (Hotel rooms per night) 350 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 40 Demand 100 Airfare from LAX to LAS (Dollars per round trip) Room Rate at Exhilaration (Dollars per night) 100 50 0 50 100 150 200 250 300 350 400 450 500 200 QUANTITY (Hotel rooms) PRICE (Dollars per room)
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Triple Sevens is charging $150 per room per night. If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Triple Sevens from rooms per night to |rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the Triple Sevens are If the price of a room at the Exhilaration were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Triple Sevens from rooms per night to rooms per night. Because the cross elasticity of demand is , hotel rooms at the Triple Sevens and hotel rooms at the Exhilaration are Triple Sevens is debating decreasing the price of its rooms to $125 per night. Under the initial demand conditions, you can see that this would cause its total revenue to . Decreasing the price will always have this effect on revenue when Triple Sevens is operating on the portion of its demand curve.
Transcribed Image Text:For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Triple Sevens is charging $150 per room per night. If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Triple Sevens from rooms per night to |rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the Triple Sevens are If the price of a room at the Exhilaration were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Triple Sevens from rooms per night to rooms per night. Because the cross elasticity of demand is , hotel rooms at the Triple Sevens and hotel rooms at the Exhilaration are Triple Sevens is debating decreasing the price of its rooms to $125 per night. Under the initial demand conditions, you can see that this would cause its total revenue to . Decreasing the price will always have this effect on revenue when Triple Sevens is operating on the portion of its demand curve.
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