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 hotelmanagement better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demandfactors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool.Demand FactorAverage American household incomeInitial Value$50,000 per year$200 per roundtripRoundtrip airfare from San Francisco (SFO) to Las Vegas (LAS)Room rate at the Grandiose Hotel and Casino, which is near the Peacock$250 per nightUse 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 Input ToolMarket for Peacock's Hotel Rooms500450Price300(Dollars per room)400Quantity200Demanded350(Hotel rooms pernight)300er room) 1200150100500PRICE (Demand50Average Income(Thousands ofdollars)+Airfare from SFO to200LAS(Dollars per050 100 150 200 250 300 350 400 450 500roundtrip)QUANTITY (Hotel rooms)250Room Rate atGrandiose(Dollars per night)For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $300 per roomper night.▼ fromIf average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Peacockrooms per night torooms per night. Therefore, the income elasticity of demand is, meaning that hotel rooms at thePeacock areIf the price of an airline ticket from SFO to LAS were to increase by 10%, from $200 to $220 roundtrip, while all other demand factors remain at theirrooms per night. Because the cross-initial values, the quantity of rooms demanded at the Peacock fromprice elasticity of demand isrooms per night tohotel rooms at the Peacock and airline trips between SFO and LAS are"Peacock is debating decreasing the price of its rooms to $275 per night. Under the initial demand conditions, you can see that this would cause itsportiontotal revenue toDecreasing the price will always have this effect on revenue when Peacock is operating on theof its demand curve.OLG

Answered: Image /qna-images/answer/a6a9b8e2-afc3-47c1-a384-a71864071b6f.jpg

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. Demand Factor Average American household income Initial Value $50,000 per year $200 per roundtrip $250 per night Roundtrip airfare from San Francisco (SFO) to Las Vegas (LAS) Room rate at the Grandiose Hotel and Casino, which is near the Peacock 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 Input Tool ? Market for Peacock's Hotel Rooms 500 450 Price 300 (Dollars per room) 400 Quantity 200 350 Demanded (Hotel rooms per night) 300 a 18 O

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. Demand Factor Average American household income Initial Value $50,000 per year $200 per roundtrip $250 per night Roundtrip airfare from San Francisco (SFO) to Las Vegas (LAS) Room rate at the Grandiose Hotel and Casino, which is near the Peacock 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 Input Tool ? Market for Peacock's Hotel Rooms 500 450 Price 300 (Dollars per room) 400 Quantity 200 350 Demanded (Hotel rooms per night) 300 a 18 O

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.10P

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