Graph Input Tool 500 Market for Big Winner's Hotel Rooms 450 | Price 400 (Dollars per room) 350 A Quantity 1 g 350 + Demanded 50 E I (Hotel rooms per a 300 | night) \" I E 250 I E Q 200 _ I Demand Factors 3 I _ 150 Average Income E : D mand (Thousands of 40 100 " I dollars) 50 __ I cigare from JFK to 200 o I I I I I I I I I (Dallarslper 0 so 100 150 200 250 300 350 400 450 500 mundtr'P) QUANTITY (Hotel rooms) Room Rate at Lucky 250 (Dollars per night) For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Big Winner is charging $350 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 Big Winner v from rooms per night to rooms per night. Therefore, the income elasticity of demand is V , meaning that hotel rooms at the Big Winner are V . If the price of a room at the Lucky were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Big Winner 7 from rooms per night to rooms per night. Because the cross-price elasticity of demand is V , hotel rooms at the Big Winner and hotel rooms at the Lucky are v . Big Winner 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 V . Decreasing the price will always have this effect on revenue when Big Winner is operating on the v portion of its demand curve