6. Applica oms The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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 $40,000 per year Roundtrip airfare from Los Angeles (LAX) to Las Vegas (LAS) $200 per roundtrip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $200 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 (?) Market for Triple Sevens's Hotel Rooms Price 300 (Dollars per room) Quantity 200 Demanded (Hotel rooms per night) PRICE (Dollars per room) Demand Factors PRICE (Dollars per roo! $ 8 5 8 8 8 8 8 Demand Average Income 40 (Thousabemanaea (Hotel rooms per night Demand Factors 8 8 8 8 8 8 8 Demand Average Income 40 (Thousands of dollars) Airfare from LAX to 200 (Dollars per 50 100 150 200 250 300 350 400 450 500 roundtrip) QUANTITY (Hotel rooms) Room Rate at 200 Exhilaration (Dollars per night) For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $300 per room per night. If average household income increases by 50%, from $40,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens rises from 200 rooms per night to 300 rooms per night. Therefore, the income elasticity of demand is _positive , meaning that hotel rooms at the Triple Sevens are _a normal good If the price of a room at the Exhilaration were to decrease by 20%, from $200 to $160, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Triple Sevens falls from 200 rooms per night to | 160 rooms per night. Because the cross-price elasticity of demand is positive , hotel rooms at the Triple Sevens and hotel rooms at the Exhilaration are _substitutes Triple Sevens is debating decreasing the price of its rooms to $275 per night. Under the initial demand conditions, you can see that this would cause its total revenue to increase . Decreasing the price will always have this effect on revenue when Triple Sevens is operating on the elastic * portion of its demand curve