Question
Can I please get a step by step explanation on this? I'm not understanding how the number of rooms went from 350 to 400 (the
Can I please get a step by step explanation on this? I'm not understanding how the number of rooms went from 350 to 400 (the actual correct answer is 450) Here is the problem:
If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock rises from 350rooms per night to400rooms per night. Therefore, the income elasticity of demand is positive , meaning that hotel rooms at the Peacock area normal good .
Same thing here, I'm not understanding how the number of rooms went from 350 to 250?
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 quantity of rooms demanded at the Peacock falls from 350 rooms per night to 250 rooms per night. Because the cross-price elasticity of demand is positive , hotel rooms at the Peacock and hotel rooms at the Grandiose aresubstitutes .
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