For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $100 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 Lakes rooms per night to rooms per night. Therefore, the income elasticity of demand is from , meaning that hotel rooms at the Lakes are If the price of a room at the Mountaineer 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 Lakes rooms per night. Because the cross-price elasticity of from rooms per night to demand is , hotel rooms at the Lakes and hotel rooms at the Mountaineer are

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $100 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 Lakes rooms per night to rooms per night. Therefore, the income elasticity of demand is from , meaning that hotel rooms at the Lakes are If the price of a room at the Mountaineer 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 Lakes rooms per night. Because the cross-price elasticity of from rooms per night to demand is , hotel rooms at the Lakes and hotel rooms at the Mountaineer are

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

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per room)
500
450
400
350
300
250
200
150
100
50
0
Demand
0 50 100 150 200 250 300 350 400 450 500
QUANTITY (Hotel rooms)
Graph Input Tool
Market for Lakes's Hotel Rooms
Price
(Dollars per room)
Quantity
Demanded
(Hotel rooms per
night)
Demand Factors
Average Income
(Thousands of
dollars)
Airfare from MSY to
ACY
(Dollars per
roundtrip)
Room Rate at
Mountaineer
(Dollars per night)
100
400
40
100
250
?
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $100 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 Lakes from
rooms per night to
rooms per night. Therefore, the income elasticity of demand is
, meaning that hotel rooms at the Lakes are
If the price of a room at the Mountaineer 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 Lakes from
rooms per night to
rooms per night. Because the cross-price elasticity of
demand is
hotel rooms at the Lakes and hotel rooms at the Mountaineer are
Lakes is debating decreasing the price of its rooms to $75 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 Lakes is operating on the
portion of its
demand curve.

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PRICE (Dollars per room) 500 450 400 350 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Triple Sevens's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from LAX to LAS (Dollars per roundtrip) Room Rate at Exhilaration (Dollars per night) 350 150 50 250 200 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $350 per room per night. If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens rooms per night. Therefore, the income elasticity of demand is from rooms per night to , meaning that hotel rooms at the Triple Sevens are If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 roundtrip, while all other demand factors…
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