The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, 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 New Orleans (MSY) to Atlantic City (ACY)$200 per roundtripRoom rate at the Meadows Hotel and Casino, which is near the Oceans$200 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.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)50045040035030025020015010050 +0+0Demand50 100 150 200 250 300 350 400 450 500QUANTITY (Hotel rooms)Graph Input ToolMarket for Oceans's Hotel RoomsPrice(Dollars per room)QuantityDemanded(Hotel rooms pernight)Demand FactorsAverage Income(Thousands ofdollars)Airfare from MSY toACY(Dollars perroundtrip)Room Rate atMeadows(Dollars per night)10040050200200(?) For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $100 per roomper night.If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Oceans fromrooms per night to, meaning that hotel rooms at therooms per night. Therefore, the income elasticity of demand isOceans areIf the price of a room at the Meadows were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, thequantity of rooms demanded at the Oceans fromrooms per night. Because the cross-price elasticity ofrooms per night todemand ishotel rooms at the Oceans and hotel rooms at the Meadows areOceans is debating decreasing the price of its rooms to $75 per night. Under the initial demand conditions, you can see that this would cause its totalrevenue to. Decreasing the price will always have this effect on revenue when Oceans is operating on theportion ofits demand curve.

Demand Factor Value Average American household income $50,000 per year Roundtrip airfare…

Answered: The following graph input tool shows…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Concept explainers

Question

The following graph input tool shows the daily demand for hotel rooms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool.

Demand Factor	Initial Value
Average American household income	$50,000 per year
Roundtrip airfare from New Orleans (MSY) to Atlantic City (ACY)	$200 per roundtrip
Room rate at the Meadows Hotel and Casino, which is near the Oceans	$200 per night

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $100 per room
per night.
If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Oceans from
rooms per night to
, meaning that hotel rooms at the
rooms per night. Therefore, the income elasticity of demand is
Oceans are
If the price of a room at the Meadows were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the
quantity of rooms demanded at the Oceans from
rooms per night. Because the cross-price elasticity of
rooms per night to
demand is
hotel rooms at the Oceans and hotel rooms at the Meadows are
Oceans is debating decreasing the price of its rooms to $75 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 Oceans is operating on the
portion of
its demand curve.

Expert Solution

Given:

Demand Factor	Value
Average American household income	$50,000 per year
Roundtrip airfare from New Orleans (MSY) to Atlantic City (ACY)	$200 per roundtrip
Room rate at the Meadows Hotel and Casino, which is near the Oceans	$200 per night
Market Price per Hotel Room	$100
Quantity demanded of Hotel rooms per night	400

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions