For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $350 per roomper night.fromIf average household income increases by 50%, from $40,000 to $60,000 per year, the quantity of rooms demanded at the Peacockrooms per night torooms per night. Therefore, the income elasticity of demand is, meaning that hotel rooms at thePeacock areIf the price of a room at the Grandiose 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 Peacockfromrooms per night to [rooms per night. Because the cross-price elasticityof demand is,hotel rooms at the Peacock and hotel rooms at the Grandiose are substitutesPeacock is debating decreasing the price of its rooms to $325 per night. Under the initial demand conditions, you can see that this would cause itstotal revenue toDecreasing the price will always have this effect on revenue when Peacock is operating on theportionof its demand curve. 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 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$40,000 per yearRoundtrip airfare from New York (JFK) to Las Vegas (LAS)$200 per roundtrip$250 per nightRoom rate at the Grandiose Hotel and Casino, which is near the PeacockUse 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 Peacock's Hotel Rooms500Price350(Dollars per room)QuantityDemanded(Hotel rooms pernight)Demand FactorsDemandAverage Income(Thousands ofdollars)Airfare from JFK toLAS(Dollars per050 100 150 200 250 300 350 400 450 500roundtrip)QUANTITY (Hotel rooms)Room Rate atGrandiose(Dollars per night)PRICE (Dollars per room)45040035030025020015010050015040200250

The law of supply and demand is a theory that explains how suppliers and customers interact.…

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $350 per room per night. from If average household income increases by 50%, from $40,000 to $60,000 per year, the quantity of rooms demanded at the Peacock rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the rooms per night to [ Peacock are If the price of a room at the Grandiose 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 Peacock from rooms per night. Because the cross-price elasticity rooms per night to [ of demand is , hotel rooms at the Peacock and hotel rooms at the Grandiose are substitutes Peacock is debating decreasing the price of its rooms to $325 per night. Under the initial demand conditions, you can see that this would cause its . Decreasing the price will always have this effect on revenue when Peacock is operating on the total revenue to 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 Peacock is charging $350 per room per night. from If average household income increases by 50%, from $40,000 to $60,000 per year, the quantity of rooms demanded at the Peacock rooms per night. Therefore, the income elasticity of demand is meaning that hotel rooms at the rooms per night to [ Peacock are If the price of a room at the Grandiose 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 Peacock from rooms per night. Because the cross-price elasticity rooms per night to [ of demand is , hotel rooms at the Peacock and hotel rooms at the Grandiose are substitutes Peacock is debating decreasing the price of its rooms to $325 per night. Under the initial demand conditions, you can see that this would cause its . Decreasing the price will always have this effect on revenue when Peacock is operating on the total revenue to portion of its 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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