For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per roomper night.If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacockfromrooms per night to|rooms per night. Therefore, the income elasticity of demand ismeaning 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 torooms per night. Because the cross-price elasticity ofdemand ishotel rooms at the Peacock and hotel rooms at the Grandiose arePeacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause itstotal revenue to. Decreasing the price will always have this effect on revenue when Peacock is operating on theportion of its demand curve. 9. Application: Elasticity and hotel roomsThe 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$50,000 per yearRoundtrip airfare from San Francisco (SFO) to Las Vegas (LAS)S100 per roundtripRoom rate at the Grandiose Hotel and Casino, which is near the Peacock$250 per nightUse the graph input tool to help youthe foliowlquestioYou willgraded on any changes you makegraph.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 ToolMarket for Peacock's Hotel Rooms500450Price(Dollars per room)200400QuantityDemanded(Hotel rooms pernight)300350300250Demand Factors200150DemandAverage Income50(Thousands ofdollars)10050Airfare from SFO toLAS(Dollars perroundtrip)10050 100 150 200 250 300 350o 400 450 500QUANTITY (Hotel rooms)Room Rate atGrandiose(Dollars per night)250For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per roomper night.PRICE (Dolars per room)

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacock_ from ] 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 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 from , hotel rooms at the Peacock and hotel rooms at the Grandiose are quantity of rooms demanded at the Peacock rooms per night to ] rooms per night. Because the cross-price elasticity of demand is 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.

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacock_ from ] 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 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 from , hotel rooms at the Peacock and hotel rooms at the Grandiose are quantity of rooms demanded at the Peacock rooms per night to ] rooms per night. Because the cross-price elasticity of demand is 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.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 3.6P: (Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following...

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