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The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These deman factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. (Note: All values are hypothetical.) Demand Factor Initial Value Average Canadian household income $40,000 per year Round trip airfare from 0ttawa (YOW) to Las Vegas (LAS) $250 per round trip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $250 per night Use the graph input tool to help you answer the following questions. You will not be scored 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. Graph Input Tool 500 Market for Peacock's Hotel Rooms 450 I Price (Dollars per room) 400 200 Quantity Demanded (Hotel rooms per night) 350 300 300 250 O 200 Demand Fnet (Dollars per room)

The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These deman factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. (Note: All values are hypothetical.) Demand Factor Initial Value Average Canadian household income $40,000 per year Round trip airfare from 0ttawa (YOW) to Las Vegas (LAS) $250 per round trip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $250 per night Use the graph input tool to help you answer the following questions. You will not be scored 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. Graph Input Tool 500 Market for Peacock's Hotel Rooms 450 I Price (Dollars per room) 400 200 Quantity Demanded (Hotel rooms per night) 350 300 300 250 O 200 Demand Fnet (Dollars per room)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Choices for labelled parts: 1. Falls, rises 2. Negative, positive 3. An inferior good, a normal good 4. Falls, rises 5. Negative, positive 6. Complements, substitutes 7. Decrease, increase 8. Elastic, inelastic
400 Quantity Demanded (Hotel rooms per night) 300 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 Demand 40 100 Airfare from YOW to LAS (Dollars per round trip) 50 250 50 100 150 200 250 300 350 400 450 500 Room Rate at Grandiose (Dollars per night) QUANTITY (Hotel rooms) 250 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $200 per room per night. from If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the rooms per night to Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $250 to $200, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Because the cross-price elasticity of to demand is hotel rooms at the Peacock and hotel rooms at the Grandiose are 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. PRICE (Dollars per room)
Transcribed Image Text:400 Quantity Demanded (Hotel rooms per night) 300 350 300 250 Demand Factors 200 Average Income (Thousands of dollars) 150 Demand 40 100 Airfare from YOW to LAS (Dollars per round trip) 50 250 50 100 150 200 250 300 350 400 450 500 Room Rate at Grandiose (Dollars per night) QUANTITY (Hotel rooms) 250 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $200 per room per night. from If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the rooms per night to Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $250 to $200, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Because the cross-price elasticity of to demand is hotel rooms at the Peacock and hotel rooms at the Grandiose are 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. PRICE (Dollars per room)
The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. 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. (Note: All values are hypothetical.) Demand Factor Initial Value Average Canadian household income $40,000 per year Round trip airfare from Ottawa (YOW) to Las Vegas (LAS) $250 per round trip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $250 per night Use the graph input tool to help you answer the following questions. You will not be scored 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. Graph Input Tool 500 Market for Peacock's Hotel Rooms 450 I Price (Dollars per room) 400 200 Quantity Demanded (Hotel rooms per night) 350 300 300 250 200 Demand Factors O 150 CE (Dollars per room)
Transcribed Image Text:The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. 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. (Note: All values are hypothetical.) Demand Factor Initial Value Average Canadian household income $40,000 per year Round trip airfare from Ottawa (YOW) to Las Vegas (LAS) $250 per round trip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $250 per night Use the graph input tool to help you answer the following questions. You will not be scored 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. Graph Input Tool 500 Market for Peacock's Hotel Rooms 450 I Price (Dollars per room) 400 200 Quantity Demanded (Hotel rooms per night) 350 300 300 250 200 Demand Factors O 150 CE (Dollars per room)
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