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 Meadows Hotel and Casino, which is near the Oceans $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 Oceans's Hotel Rooms 500 -- 450 Price 100 D H 400 ( 0 ars per room) A Quantity 400 E 350 Demanded 9 (Hotel rooms per 5 300 night) 0. \".2 f.\" 250 9': 200 Demand Factors 8 E 150 Derrand Average Income 50 0. (Thousands of 100 1' dollars) 50 Airfare from DSM to I ACY 200 0 i | i | i | i I | i (Dollars per 0 50 100 150 200 250 300 350 400 450 500 mundtnp) QUANTITY (Hotel rooms) Room Rate at 200 Meadows ( Dollars per night) Market for Oceans's Hotel Rooms 500 -- 45 _ Price 100 Doll 0 400 __ ( ars perro m) "' Quantity 400 S 350 Demanded 9 (Hotel rooms per a 300 night) Q. 9 g 250 8 200 _ Demand Factors 5 E 15 " Den'and Average Income 50 (1 (Thousands of 10" ' 1' dollars) 50 -- Airfare from DSM to I ACY 200 0 l l | | l l l I | i (Dollarsper o 50 100 150 200 250 300 350 400 450 500 'Wdmp) QUANTITY (Hotel rooms) Room Rate at 200 Meadows ( Dollars per night) For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Oceans is charging $100 per room per night. If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Oceans V from rooms per night to rooms per night. Therefore, the income elasticity of demand is V , meaning that hotel rooms at the Oceans are Y . If the price of a room at the Meadows 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 Oceans V from rooms per night to rooms per night. Because the cross-price elasticity of demand is V , hotel rooms at the Oceans and hotel rooms at the Meadows are V . Oceans is debating decreasing the price of its rooms to $75 per night. Under the initial demand conditions, you can see that this would cause its total revenue to V . Decreasing the price will always have this effect on revenue when Oceans is operating on the V portion of its demand curve