Many travellers visit PEI for the local seafood.

a) If the main goal of a visit is to enjoy the seafood, would you expect demand for local hotels to be more or less elastic than otherwise?

b) If a poor catch increases the price of seafood, what do you expect to happen for the demand for hotels in PEI? Would this effect be greater or less if the demand for seafood is inelastic?

c) If the price of Lobster in New Brunswick increases, what do you expect to happen for the demand for trips to PEI?

d) Suppose the income elasticity of demand for trips to PEI from the rest of Canada is 1.12. Given this, what will a 3% decrease in average Canadian income on have on visits to PEI?

Answer rating: 100% (QA)

a If the main goal of a visit is to enjoy the seafood it is reasonable to expect that the demand for local hotels would be more elastic than otherwise ... View the full answer