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 Graph Input Tool Market for Lakes's Hotel Rooms Price (Dollars per room) 300 Quantity 200 Demanded (Hotel rooms per night) Demand Factors Demand Average Income 50 (Thousands of dollars) 50 Airfare from MSY to 100 ACY 0 (Dollars per 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) roundtrip) Room Rate at Mountaineer (Dollars per night) 250 Activity Frame ? For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $300 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 Lakes rises rooms per night. Therefore, the income elasticity of demand is from rooms per night to hotel rooms at the Lakes are , meaning that If the price of a room at the Mountaineer 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 Lakes demand is from rooms per night to hotel rooms at the Lakes and hotel rooms at the Mountaineer are rooms per night. Because the cross-price elasticity of
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 Graph Input Tool Market for Lakes's Hotel Rooms Price (Dollars per room) 300 Quantity 200 Demanded (Hotel rooms per night) Demand Factors Demand Average Income 50 (Thousands of dollars) 50 Airfare from MSY to 100 ACY 0 (Dollars per 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) roundtrip) Room Rate at Mountaineer (Dollars per night) 250 Activity Frame ? For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $300 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 Lakes rises rooms per night. Therefore, the income elasticity of demand is from rooms per night to hotel rooms at the Lakes are , meaning that If the price of a room at the Mountaineer 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 Lakes demand is from rooms per night to hotel rooms at the Lakes and hotel rooms at the Mountaineer are rooms per night. Because the cross-price elasticity of
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text: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
Graph Input Tool
Market for Lakes's Hotel Rooms
Price
(Dollars per room)
300
Quantity
200
Demanded
(Hotel rooms per
night)
Demand Factors
Demand
Average Income
50
(Thousands of
dollars)
50
Airfare from MSY to
100
ACY
0
(Dollars per
0 50 100 150 200 250 300 350 400 450 500
QUANTITY (Hotel rooms)
roundtrip)
Room Rate at
Mountaineer
(Dollars per night)
250
Activity Frame
?
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $300 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
Lakes rises
rooms per night. Therefore, the income elasticity of demand is
from
rooms per night to
hotel rooms at the Lakes are
, meaning that
If the price of a room at the Mountaineer 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 Lakes
demand is
from
rooms per night to
hotel rooms at the Lakes and hotel rooms at the Mountaineer are
rooms per night. Because the cross-price elasticity of
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