.............. 20. Application: Elasticity and hotel roomsThe following graph input tool shows the daily demand for hotel rooms at the Triple Sevens Hotel and Casino in Las Vegas, Nevada. To help the hotelmanagement better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demandfactors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool.Demand FactorInitial ValueAverage American household income$50,000 per yearRoundtrip airfare from New York (JFK) to Las Vegas (LAS)$100 per roundtripRoom rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens$250 per nightUse 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 Tool500Market for Triple Sevens's Hotel Rooms450I Price(Dollars per room)200400QuantityBemanded300350(Hotel rooms per300night)250200Demand Factors150DemandAverage Income(Thousands ofdollars)5010050Airfare from JFK toLAS(Dollars perroundtrip)10050 100 150 200 250 300 350 400 450 500QUANTITY (Hotel rooms)Room Rate atExhilaration(Dollars per night)250For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $200 perroom per night.If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Triple Sevensv from O rooms per night torooms per night. Therefore, the income elasticity of demand isv, meaning thathotel rooms at the Triple Sevens areIf the price of a room at the Exhilaration were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values,the quantity of rooms demanded at the Triple Sevens v fromrooms per night torooms per night. Because the cross-priceelasticity of demand ishotel rooms at the Triple Sevens and hotel rooms at the Exhilaration areTriple Sevens is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would causeits total revenue tov. Decreasing the price will always have this effect on revenue when Triple Sevens is operating on thev portion of its demand curve.PRICE(Dollars per room)

Introduction. The question basically focusses on the Income elasticity and Cross elasticity of…

Following graph input tool shows the daily demand for hotel rooms at the Triple Sevens Hotel and Casino in Las Vegas, Nevada. To help the hotel agement better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand rs, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value Average American household income $50.000 per year Roundtrip airfare from New York (JFK) to Las Vegas (LAS) $100 per roundtrip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $250 per night che graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. : 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 500 Market for Triple Sevens's Hotel Rooms 450 Price (Dollars per room) 200 400 Quantity Demanded 300 350 (Hotel rooms per night) 300 250 Demand Factors 200 150 Average Income (Thousands of dollars) Demand 50 100 50 Airfare from JFK to 100 LAS (Dollars per roundtrip) O 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Room Rate at Exhilaration (Dollars per night) 250 ach of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $200 per per night. erage household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Triple Sevens v from rooms per night to ] rooms per night. Therefore, the income elasticity of demand is v meaning that rooms at the Triple Sevens are e price of a room at the Exhilaration were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, quantity of rooms demanded at the Triple Sevensv from rooms per night to rooms per night. Because the cross-price icity of demand is v , hotel rooms at the Triple Sevens and hotel rooms at the Exhilaration are eSevens is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause tal revenue to * . Decreasing the price will always have this effect on revenue when Triple Sevens is operating on the v portion of its demand curve.