**Application: Elasticity and Hotel Rooms**The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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.**Demand Factors**| Demand Factor | Initial Value ||-------------------------------------------------------|-------------------------------------|| Average American household income | $50,000 per year || Roundtrip airfare from Los Angeles (LAX) to Las Vegas (LAS) | $100 per roundtrip || Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens | $250 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.***Note:** Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.**Graph Explanation**The graph displays a demand curve marked "Demand" which plots the relationship between the quantity of hotel rooms demanded (x-axis labeled QUANTITY) and the price per room (y-axis labeled PRICE). The initial point on the graph intersects the demand curve where the price is $200 per room and the quantity is 300 rooms.**Graph Input Tool***Market for Triple Sevens's Hotel Rooms:*- Price (Dollars per room): 200- Quantity Demanded (Hotel rooms per night): 300*Demand Factors:*- Average Income (Thousands of dollars): 50- Airfare from LAX to LAS (Dollars per roundtrip): 100- Room Rate at Exhilaration (Dollars per night): 250**Scenarios Discussion:**1. **Increase in Household Income:** If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens shifts from ___ rooms per night to ___ rooms per night. Therefore, the income elasticity of demand is ___, meaning that hotel rooms at the Triple Sevens are ___.2. **Increase in Airfare:** If the price of an airline ticket from LAX to LAS were to increase by 10

Income Elasticity of Demand is defined as the degree of responsiveness of a quantity demanded for a…

The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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.

The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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