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You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies, flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies increases by 6%, the quantity of flopsicles sold decreases by 6% and the quantity of kipples sold increases by 3%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and flopsicles, and then between guppy gummies and kipples. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Guppy Gummies Flopsicles Kipples Grade It Now Save & Continue Continue without saving8. Application: Elasticity and hotel rooms 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) $250 per roundtrip Room rate at the Exhilaration Hotel and Casino, which is near the Triple Sevens $250 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 500 450 Price 350 ( Dollars per room) 400 Quantity 150 350 Demanded (Hotel rooms per 300 night) PRICE (Dollars per room) 250 200 Demand Factors 150 Demand Average Income 40 (Thousands of 100 dollars) 50 Airfare from LAX to 250 LAS ( Dollars per 0 50 100 150 200 250 300 350 400 450 500 roundtrip) QUANTITY (Hotel rooms) Room Rate at 250 Exhilaration (Dollars per night)For each of the following scenarios, begin by assuming that all demand factnrs are set to their original values and Triple Sevens 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 Triple Sevens v from |:| rooms per night to |:| rooms per night. Therefore, the income elasticity of demand is V , meaning that hotel rooms at the Triple Sevens are V . If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 roundtrip, Wl'llle all other demand Factors remain at their initial values, the quantity of rooms demanded at the Triple Sevens V from |:| rooms per night to |:| rooms per night. Because the cross-price elasticity of demand is V , hotel rooms at the Triple Sevens and airline trips between LAX and LAS are v . Triple Sevens is debating decreasing the price of ils rooms to $325 per night. Under the initial demand conditions, you can see that this would cause its total revenue to V . Dec-easing the price will always have this effect on revenue when Triple Sevens is operating on the Grade It NOW Save & Continue Continue without saving v portion of its demand curve