You are a manager at a hotel in a popular tourist destination. Assume that the market forhotel rooms in the city is perfectly competitive.a) List two characteristics of a perfectly competitive market and describe what theymean on the market for hotel rooms.OOOb) You estimated the average total cost and the average variable cost for every level ofoutput (quantity of hotel rooms). What else would you need to estimate to makeproduction decisions (i.e., how many rooms are getting prepared for the clients andhow many rooms are locked and not constantly being used)?c) Assume you made all the necessary calculations you described in part (b). How willyou make the production decision?d) You observe the average price per hotel room per night to be......below the minimum average variable cost [variant 1]....above the minimum average variable cost but below the minimum average total cost[variant 2]....above the minimum average total cost [variant 3].Will you keep the hotel open in the short run? Why?e) On the graph below [excluded]:Label the axes and the curves.Show the price level (a horizontal line).Show how many rooms you will get prepared for the clients (your productiondecision) in the short run.Shade the hotel's profit in the short run and state whether it's positive ornegative.f) Will you keep the hotel open in the long run? Why?g) How will your production decision in the long run depend on the fact that the hotelwas recently renovated with a $750,000 investment?●● OO0 0You are monitoring changes on the market for ice cream. You noticed that......both the price of ice cream and the quantity traded decreased [variant 1]....the price of ice cream increased, while the quantity traded decreased [variant 2]....the price of ice cream decreased, while the quantity traded increased [variant 3]....both the price of ice cream and the quantity traded increased [variant 4].Analyze the observed changes.a) On the supply-and-demand diagram, which curve shifted and what was the directionof the shift?Ob) Suggest three possible events that could have caused this shift of the curve. For eachevent, explain why it would lead to this shift.c) What affects the slope of the curve that shifted?d) On the graph below [excluded]:Label the axes.●Graph the demand curve and the supply curve. Make sure you label them.Graph the shift of the curve and label the new curve.Label the old equilibrium and the new equilibrium (either label the point or itscoordinates).e) On your graph, shade the area corresponding to the change in [see below] and statewhether [see below] increased or decreased because of the shift of the curve.Producer surplus [variants 1 and 4].O Consumer surplus [variants 2 and 3].

Perfect competition: A firm in the competitive market is a price taker because it has large number…

You are a manager at a hotel in a popular tourist destination. Assume that the market for hotel rooms in the city is perfectly competitive. a) List two characteristics of a perfectly competitive market and describe what they mean on the market for hotel rooms. b) You estimated the average total cost and the average variable cost for every level of output (quantity of hotel rooms). What else would you need to estimate to make production decisions (i.e., how many rooms are getting prepared for the clients and how many rooms are locked and not constantly being used)? c) Assume you made all the necessary calculations you described in part (b). How will you make the production decision?

You are a manager at a hotel in a popular tourist destination. Assume that the market for hotel rooms in the city is perfectly competitive. a) List two characteristics of a perfectly competitive market and describe what they mean on the market for hotel rooms. b) You estimated the average total cost and the average variable cost for every level of output (quantity of hotel rooms). What else would you need to estimate to make production decisions (i.e., how many rooms are getting prepared for the clients and how many rooms are locked and not constantly being used)? c) Assume you made all the necessary calculations you described in part (b). How will you make the production decision?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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