### Economic Analysis of Hotel Demand**Graphs and Diagrams:**1. **Graph Depicting the Demand Curve for Hotel Rooms at Peacock Hotel:** - **X-Axis:** Represents the quantity of hotel rooms. - **Y-Axis:** Represents the price per room in dollars. - The curve descends from left to right, indicating a typical downward-sloping demand curve where an increase in quantity demanded is associated with a decrease in price per room.2. **Variables and Other Details:** - **Airfare from SFO to LAS:** $200 per roundtrip. - **Room Rate at Grandiose:** $250 per night.---**Demand Scenarios:**1. **Impact of Income Increase:** - If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Peacock increases from ______ rooms per night to ______ rooms per night. Therefore, the income elasticity of demand is ______, indicating that hotel rooms at the Peacock are ______ (e.g., normal or luxury goods).2. **Impact of Airline Ticket Price Increase:** - If the price of an airline ticket from SFO to LAS increases by 10%, from $200 to $220 roundtrip, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacock decreases from ______ rooms per night to ______ rooms per night. Because the cross-price elasticity of demand is ______, hotel rooms at the Peacock and airline trips between SFO and LAS are ______ (e.g., substitutes or complements).3. **Price Reduction Impact:** - Peacock is debating reducing the price of its rooms to $275 per night. Under the initial demand conditions, you can see that this would decrease 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.### Key Takeaways:- Understanding the elasticity concepts and their implications can help in making informed decisions regarding pricing and marketing strategies.- Accurate data analysis is crucial for predicting how various factors like income changes or price alteration in complementary goods (e.g., airline tickets) may affect the demand for hotel rooms.Feel free to adjust the placeholder values, "______," with accurate figures from your calculations or consult your instructor for further details. **Understanding Hotel Room Demand: An Interactive Learning Tool**The following educational module provides an interactive graph input tool designed to analyze the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. To aid hotel management in comprehending market dynamics, an economist has pinpointed three primary factors influencing room demand. The initial values of these factors are displayed below:### Demand Factors and Corresponding Initial Values| Demand Factor | Initial Value ||-------------------------------------------------------------------------------------|-----------------------------|| **Average American household income** | $50,000 per year || **Roundtrip airfare from San Francisco (SFO) to Las Vegas (LAS)** | $200 per roundtrip || **Room rate at the Grandiose Hotel and Casino, which is near the Peacock** | $250 per night |### Instructions for Using the Graph Input ToolUtilize the graph input tool to explore how variations in these factors impact room demand. You are encouraged to manipulate the values to see real-time changes in the demand curve.**Important Note:** Modifications to values in the input fields will automatically update the graph and corresponding data.### Explanation of the Graph: "Market for Peacock’s Hotel Rooms"The interactive graph shows the relationship between price and quantity demanded for hotel rooms at the Peacock Hotel.- **Y-axis (Vertical):** Represents the price in dollars per room.- **X-axis (Horizontal):** Represents the quantity of hotel rooms demanded per night.Currently, the graph is initialized with:- **Price:** $300 per room- **Quantity Demanded:** 200 rooms### Graph Interpretation- The blue downward-sloping line illustrates the initial demand curve based on the provided data.- Users can adjust the values of key factors to model different scenarios and observe how the demand curve shifts in response.This tool is an excellent resource for understanding the elasticity of demand and the factors influencing it. Explore and manipulate the factors to gain deeper insights into the hotel room market in Las Vegas!

Demand is that quantity of any commodity which consumer is willing and able to buy at each possible…

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $300 per room per night. from If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Peacock rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Peacock are If the price of an airline ticket from SFO to LAS were to increase by 10%, from $200 to $220 roundtrip, 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 of demand is rooms per night to hotel rooms at the Peacock and airline trips between SFO and LAS are Peacock is debating decreasing the price of its rooms to $275 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.

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $300 per room per night. from If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Peacock rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Peacock are If the price of an airline ticket from SFO to LAS were to increase by 10%, from $200 to $220 roundtrip, 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 of demand is rooms per night to hotel rooms at the Peacock and airline trips between SFO and LAS are Peacock is debating decreasing the price of its rooms to $275 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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