The demand function for rooms is Q,(p) = 700 - 5p, where Q, is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this cannot be expanded in the time horizon considered in this problem). $50 per night, 60% of which is labor costs (accruing to the (1) Compute the equilibrium number of rooms occupied, Qo, and the price per room per night, p, , before the tax is put in place (i.e., when t = 0)
The demand function for rooms is Q,(p) = 700 - 5p, where Q, is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this cannot be expanded in the time horizon considered in this problem). $50 per night, 60% of which is labor costs (accruing to the (1) Compute the equilibrium number of rooms occupied, Qo, and the price per room per night, p, , before the tax is put in place (i.e., when t = 0)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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