9. Application: Elasticity and hotel roomsThe Inlinwing graph input tool shows the daily demand for hotel moms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotelmanagement better understand the market, an woonomist identified three primary factors that affect the demand for me ach night. The demandfactum, lung with the values corresponding to the initial demand curve, are shown in the following table and alungside the graph input tool.Demand FactorAverage American household incomeRoundtrip airfare from New Orleans (MSY) to Atlantic City (ACY)Room ratu at the Meadows Hotel and Casino, which is near the OceanUse the graph input tool to help you answer the following questions. You wil 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.Show Transcribed Text600450******1000Demand++55155 366 350 351 350 100 ansQuluzinQUANTITY (Hotel rooms)GEMINALInitial Value$50,000 y$100 per rundtrip$250 pilsGraph Input ToolMarket for Uceans's Hotel RoomsShow Transcribed TextPrice(Dollars per room)DemandedwareDemand actorsAverage Income(Thousands ofcareAirfare from MSY toACY(Dolars perhoundtripRoom Rate atMeadows(Dollars per night)30020060100260For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $300 per roomwwwapa hnusnis income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Graafmrooms per night to rooms par night. Thewine, the income elasticity of demand inIt the price of a room at the Meadows were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, thequantity of rooms demanded at the Oceans from rooms per night to rooms per night. Because the cross-price elasticity ofdomanda,hotel rooms at the Oceans and hotel rooms at the Meadows areOma i dubating demasing the price of its roums to $275 per night. Under the initial demand conditions, you can www that this would cause totalwww luDecasing the price will always have this affect un revenue when Dcmans is operating on theportion ofdemand curve.

Demand FactorValueAverage American household income$50,000 per yearRoundtrip airfare from New…

For each of the following conifos, begin by assuming that all demand factors are not to their original values and Oceans is charging $300 per room vrage huis inrame increases hy 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Grana rooms par night. Then, the income asticity of demand is DEMAIN AL meaning that hal rooms at the the price of a room at the Meadows were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of roame demanded at the oceana from rooms per night. Because the cross-price elasticity of rooms per night to demand is hotel rooms at the Oceans and hotel rooms at the Meadows are OLMais debating deur masing the price of its roums to $275 per right under the initial demand conditions, you can www that this would cause total revi Decreasing the price will always have this affect un revenue when Oceans is uperating on the portion of demand curve

For each of the following conifos, begin by assuming that all demand factors are not to their original values and Oceans is charging $300 per room vrage huis inrame increases hy 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Grana rooms par night. Then, the income asticity of demand is DEMAIN AL meaning that hal rooms at the the price of a room at the Meadows were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of roame demanded at the oceana from rooms per night. Because the cross-price elasticity of rooms per night to demand is hotel rooms at the Oceans and hotel rooms at the Meadows are OLMais debating deur masing the price of its roums to $275 per right under the initial demand conditions, you can www that this would cause total revi Decreasing the price will always have this affect un revenue when Oceans is uperating on the portion of demand curve

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

9. Application: Elasticity and hotel rooms
The Inlinwing graph input tool shows the daily demand for hotel moms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel
management better understand the market, an woonomist identified three primary factors that affect the demand for me ach night. The demand
factum, lung with the values corresponding to the initial demand curve, are shown in the following table and alungside the graph input tool.
Demand Factor
Average American household income
Roundtrip airfare from New Orleans (MSY) to Atlantic City (ACY)
Room ratu at the Meadows Hotel and Casino, which is near the Ocean
Use the graph input tool to help you answer the following questions. You wil 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.
Show Transcribed Text
600
450
******
100
0
Demand
++
55155 366 350 351 350 100 ans
Quluzin
QUANTITY (Hotel rooms)
GEMINAL
Initial Value
$50,000 y
$100 per rundtrip
$250 pils
Graph Input Tool
Market for Uceans's Hotel Rooms
Show Transcribed Text
Price
(Dollars per room)
Demanded
ware
Demand actors
Average Income
(Thousands of
care
Airfare from MSY to
ACY
(Dolars per
houndtrip
Room Rate at
Meadows
(Dollars per night)
300
200
60
100
260
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $300 per room
wwwapa hnusnis income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Graafm
rooms per night to rooms par night. Thewine, the income elasticity of demand in
It the price of a room at the Meadows 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 Oceans from rooms per night to rooms per night. Because the cross-price elasticity of
domanda,
hotel rooms at the Oceans and hotel rooms at the Meadows are
Oma i dubating demasing the price of its roums to $275 per night. Under the initial demand conditions, you can www that this would cause total
www lu
Decasing the price will always have this affect un revenue when Dcmans is operating on the
portion of
demand curve.

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