Q1. Calculate the Income Elasticity of Demand (IED) and explain whether hotels are normal or inferior good Q2) Calculate the profit or loss for hotel bookings at the profit maximizing quantity indicated in the case study. Q3) With an average variable cost of AED 1000, calculate the Average Fixed Cost (AFC).
Q1. Calculate the Income Elasticity of Demand (IED) and explain whether hotels are normal or inferior good Q2) Calculate the profit or loss for hotel bookings at the profit maximizing quantity indicated in the case study. Q3) With an average variable cost of AED 1000, calculate the Average Fixed Cost (AFC).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Q1. Calculate the Income Elasticity of Demand (IED) and explain whether hotels are normal or inferior good
Q2) Calculate the profit or loss for hotel bookings at the profit maximizing quantity indicated in the case study.
Q3) With an average variable cost of AED 1000, calculate the Average Fixed Cost (AFC).
![6:36
CASE STUDY 202110 Dema... Eco pro >
Demand for hotels during the Expo 2020
The UAE is preparing to host Expo 2020 Dubai in
October, which is one of the world's largest and most
influential events, and will ensure the country is a
leading international tourist destination for six
months. The UAE is expected to receive millions of
tourists during this period. The success of the Expo
shows how Dubai can plan for and utilize its scarce
resources efficiently.
Dubai residents have a clear choice between
staycation options in Dubai and going abroad during
the winter season. Most residents believe that going
overseas might be risky due to covid-19 risks but
also, hotel prices in Dubai are lower, services are
better and income levels are higher compared to
2020.
Given the high demand from UAE residents and
foreign tourists, demand for all hotels would
eventually rise. DAMAC is planning to produce 6000
rooms that will be selling at AED 2000 per night.
With a marginal cost of AED 2000, DAMAC
estimates that its average total cost will be around
AED 1500 where MC is at par with MR.
Some economic experts believe that, although price
is currently AED 2000 per room whilst quantity
demanded is 6000, if price goes up to AED 2100,
demand will fall to 5000 rooms per night. Equally a
slight projected increase in income of 10% in early
November might help to push demand up by 12.5
per cent.
Considering that hotel users also visit shopping
malls and food courts, a professor estimates that in
January 2022 there can be upto 18% increase in the
price of UAE hotels which will automatically result
in a decrease of Dubai gift shopping by 24 percent.
Modified from Gulf News by Dr. Vic Benuyenah (Source:
https://gulfnews.com/uae/uae-demand-for-hotel-rooms-
boosted-by-five-factors-supporting-tourism-sector-
1.1630257904801
本*本
***********************
Exam Questions
Q1. Name and explain 2 resources that has been
used in making the Expo 2020 a success.
Q2. Explain 2 reasons why Expo 2020 event might
be beneficial to the UAE and the rest of the world.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9cbd2f24-2067-40e2-a3a9-401bded6b201%2F484626b9-35be-4686-af08-170838e79dfa%2Fkdwnmd8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6:36
CASE STUDY 202110 Dema... Eco pro >
Demand for hotels during the Expo 2020
The UAE is preparing to host Expo 2020 Dubai in
October, which is one of the world's largest and most
influential events, and will ensure the country is a
leading international tourist destination for six
months. The UAE is expected to receive millions of
tourists during this period. The success of the Expo
shows how Dubai can plan for and utilize its scarce
resources efficiently.
Dubai residents have a clear choice between
staycation options in Dubai and going abroad during
the winter season. Most residents believe that going
overseas might be risky due to covid-19 risks but
also, hotel prices in Dubai are lower, services are
better and income levels are higher compared to
2020.
Given the high demand from UAE residents and
foreign tourists, demand for all hotels would
eventually rise. DAMAC is planning to produce 6000
rooms that will be selling at AED 2000 per night.
With a marginal cost of AED 2000, DAMAC
estimates that its average total cost will be around
AED 1500 where MC is at par with MR.
Some economic experts believe that, although price
is currently AED 2000 per room whilst quantity
demanded is 6000, if price goes up to AED 2100,
demand will fall to 5000 rooms per night. Equally a
slight projected increase in income of 10% in early
November might help to push demand up by 12.5
per cent.
Considering that hotel users also visit shopping
malls and food courts, a professor estimates that in
January 2022 there can be upto 18% increase in the
price of UAE hotels which will automatically result
in a decrease of Dubai gift shopping by 24 percent.
Modified from Gulf News by Dr. Vic Benuyenah (Source:
https://gulfnews.com/uae/uae-demand-for-hotel-rooms-
boosted-by-five-factors-supporting-tourism-sector-
1.1630257904801
本*本
***********************
Exam Questions
Q1. Name and explain 2 resources that has been
used in making the Expo 2020 a success.
Q2. Explain 2 reasons why Expo 2020 event might
be beneficial to the UAE and the rest of the world.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education