2) The Greening of Motels and Hotels (25 points)

Hotels and motels that have gone green are using on average 25% less labor than those that have not gone green. Much of going green includes less towels and sheet washing for customers staying multiple nights.

a). Show the effect of the change in production for a hotel in the short-run and in the long-run using appropriate models of the firm. (isocost + isoquant graph) (10 points) v

b). Show how this may change their revenues, costs and profits (10 points)

c). Some citizens are concerned that if all hotels adopt these policies that there will be a great deal of unemployment. Please explain to these concerned citizens, at least in theory, why there will not necessarily be unemployment as an individual industry removes jobs. (5 points)v