For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $200 per room per night. rises If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock from positive rooms per night to rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the normat good Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $250 to $200, while all other demand factors remain at their initial values, the 1. quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Because the cross-price elasticity of demand is hotel rooms at the Peacock and hotel rooms at the Grandiose are 3- Peacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to 4 -. Decreasing the price will always have this effect on revenue when Peacock is operating on the portion of its demand curve.
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $200 per room per night. rises If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock from positive rooms per night to rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the normat good Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $250 to $200, while all other demand factors remain at their initial values, the 1. quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Because the cross-price elasticity of demand is hotel rooms at the Peacock and hotel rooms at the Grandiose are 3- Peacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to 4 -. Decreasing the price will always have this effect on revenue when Peacock is operating on the portion of its demand curve.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Please answer the yellow highlighted blanks. And the
Choices for labelled parts:
1. Falls, rises
2. Negative, positive
3. Complements, substitutes
4. Decrease, increase
5. Elastic, inelastic
*** the quantity demanded (hotel rooms per night)
for 50000 income is 400 hotel rooms per night
Transcribed Image Text:The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. 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. (Note:
All values are hypothetical.)
Demand Factor
Initial Value
Average Canadian household income
$40,000 per year
Round trip airfare from Ottawa (YOW) to Las Vegas (LAS)
$250 per round trip
Room rate at the Grandiose Hotel and Casino, which is near the Peacock
$250 per night
Use the graph input tool to help you answer the following questions. You will not be scored 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
500
Market for Peacock's Hotel Rooms
450
I Price
(Dollars per room)
400
200
Quantity
Demanded
(Hotel rooms per
night)
350
300
300
250
200
Demand Factors
O 150
CE (Dollars per room)
Transcribed Image Text:400
Quantity
Demanded
(Hotel rooms per
night)
300
350
300
250
Demand Factors
200
Average Income
(Thousands of
dollars)
150
Demand
40
100
Airfare from YOW to
LAS
(Dollars per round
trip)
50
250
50 100 150 200 250 300 350 400 450 500
Room Rate at
Grandiose
(Dollars per night)
QUANTITY (Hotel rooms)
250
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $200 per
room per night.
rises
from
If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock
positive
rooms per night. Therefore, the income elasticity of demand is
meaning that hotel rooms at the
rooms per night to
normat
good
Peacock are
If the price of a room at the Grandiose were to decrease by 20%, from $250 to $200, while all other demand factors remain at their initial values, the
quantity of rooms demanded at the Peacock
from
rooms per night to
rooms per night. Because the cross-price elasticity of
2
3.
demand is
hotel rooms at the Peacock and hotel rooms at the Grandiose are
Peacock is debating decreasing the price of its rooms to $175 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 Peacock is operating on the
portion of its demand curve.
PRICE (Dollars per room)
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