The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel...
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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 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 San Francisco (SFO) to Las Vegas (LAS) $200 per roundtrip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $200 per night Use the graph input tool to hela you answer the foliowing 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 amourlt in each grev field will change accordingly 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 valuet in a white field, the graph and any corresponding amounts in each grey field will chänge accordingly. Graph Input Tool Market for Peacock's Hotel Rooms 500 450 I Price (Dolars per oom) 150 Quantity Demanded (Hotel rooms per night) 350 250 200 Demand Factors 150 Average Income (Thousands of doller Demand 50 Airfare from SFO to LAS rOwlers ner undtre 3D 200 t0 00 10 ban0 300 00 00 50 b00 QUANTITY (Hotel rooms Room Rate at Sirandione 200 PRICE (Dotars per room For each of the following scenarios, begin by assuming that all demand factors are set to their original valoes and Peacock is charging $150 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacock from rooms per night to frooms per night. Therefore, the income elasticity of demand is - meaning that hotel rooms at the Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the rooms per night to quantity of rooms demanded at the Peacock from hotel rooms at the Peacock and hotel rooms at the Grandiose are rooms per night. Because the cross-price elasticity of demand is Peacock is debating decreasing the price of its rooms to $125 per night. Under the initial demand conditions, you can see that this would cause its total revenue to - Decreasing the price will abways have this effect on revenue when Peacock is operating on the portion of its demand curve. 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 Initial Value Average American household income $50,000 per year Roundtrip airfare from San Francisco (SFO) to Las Vegas (LAS) $200 per roundtrip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $200 per night Use the graph input tool to hela you answer the foliowing 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 amourlt in each grev field will change accordingly 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 valuet in a white field, the graph and any corresponding amounts in each grey field will chänge accordingly. Graph Input Tool Market for Peacock's Hotel Rooms 500 450 I Price (Dolars per oom) 150 Quantity Demanded (Hotel rooms per night) 350 250 200 Demand Factors 150 Average Income (Thousands of doller Demand 50 Airfare from SFO to LAS rOwlers ner undtre 3D 200 t0 00 10 ban0 300 00 00 50 b00 QUANTITY (Hotel rooms Room Rate at Sirandione 200 PRICE (Dotars per room For each of the following scenarios, begin by assuming that all demand factors are set to their original valoes and Peacock is charging $150 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacock from rooms per night to frooms per night. Therefore, the income elasticity of demand is - meaning that hotel rooms at the Peacock are If the price of a room at the Grandiose were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the rooms per night to quantity of rooms demanded at the Peacock from hotel rooms at the Peacock and hotel rooms at the Grandiose are rooms per night. Because the cross-price elasticity of demand is Peacock is debating decreasing the price of its rooms to $125 per night. Under the initial demand conditions, you can see that this would cause its total revenue to - Decreasing the price will abways have this effect on revenue when Peacock is operating on the portion of its demand curve.
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If the average household income increases by 10 from 50000 to 55000 the quantity of rooms demanded at peacock rises from 350 rooms per night to 385 ro... View the full answer
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