20. Application: Elasticity and hotel rooms

The following graph input tool shows the daily demand for hotel rooms at the Lakes Hotel and Casino in Atlantic City, New Jersey. 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 Des Moines (DSM) to Atlantic City (ACY)	$200 per roundtrip
Room rate at the Mountaineer Hotel and Casino, which is near the Lakes	$250 per night

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 ? 500 Market for Lakes's Hotel Rooms 450 Price 350 (Dollars per room) 400 Quantity 150 350 Demanded (Hotel rooms per 300 night) 250 PRICE (Dollars per room) 200 Demand Factors 150 Demand Average Income 50 (Thousands of 100 dollars) 50 Airfare from DSM to 200 ACY 0 (Dollars per 0 50 100 150 200 250 300 350 400 450 500 roundtrip) QUANTITY (Hotel rooms) Room Rate at 250 Mountaineer (Dollars per night)