Demand Factor\ Initial Value\ Average American household income\

$40,000

per year\

$250

per round trip\ Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS)\

$250

per night\ Room rate at the Grandiose Hotel and Casino, which is near the Peacock\ 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 Peacock's Hotel Rooms\ II Price\ (Dollars per room)\ Quantity\ (?)\ Demanded\ (Hotel rooms per night)\ Demand Factors\ Average Income\ (Thousands of dollars)\ Airfare from LAX to\ LAS\ (Dollars per round trip)\ Room Rate at\ Grandiose\ (Dollars per night)\ For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging

$350

per room per night.\ If average household income increases by

25%

, from

$40,000

to

$50,000

per year, the quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the\ Peacock are\ If the price of an airline ticket from LAX to LAS were to increase by

20%

, from

$250

to

$300

round trip, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacock from rooms per night to night. Because the crossprice elasticity of demand is , hotel rooms at the Peacock and airline trips between LAX and LAS are\ Peacock is debating decreasing the price of its rooms to

$325

per night. Under the initial demand conditions, you can see that this would cause its total revenue ts - Decreasing the price will always have this effect on revenue when Peacock is operating on the portion of its demand curve.

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 Peacock's Hotel Rooms II Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from LAX to LAS (Dollars per round trip) Room Rate at Grandiose (Dollars per night) For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Peacock is charging $350 per room per night. If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Peacock from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Peacock are If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 round trip, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacock from rooms per night to per night. Because the crossprice elasticity of demand is , hotel rooms at the Peacock and airline trips between LAX and LAS are Peacock is debating decreasing the price of its rooms to $325 per night. Under the initial demand conditions, you can see that this would cause its total revenue to - Decreasing the price will always have this effect on revenue when Peacock is operating on the of its demand curve. portion