The following graph input tool shows the daily demand for hotel rooms at the Peacock 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 Average American household income Roundtrip airfare from Los Angeles (LAX) to Las Vegas (LAS) Room rate at the Grandiose Hotel and Casino, which is near the Peacock Initial Value $50,000 per year $100 per roundtrip $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. PRICE (Dofors pet room 250 300 200 150 Graph Input Tool Market for Peacock's Hotel Rooms Price 200 (Dollars per room) Quantity 300 Demanded (Hotel rooms per night) Demand Factors Demand Average Income 50 100 (Thousands of dollar 00 Airfare from LAX to 100 LAS (Dollars per 0 50 100 150 200 250 300 300 400 450 500 QUANTITY (Hotel rooms) roundtrip Room Rate at Grandiose (Dollars per night) 250 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year the quantity of rooms demanded at the Peacock rooms per night to rooms per night. Therefore, the income elasticity of demand is Peacock are from meaning that hotel rooms at the If the price of a room at the Grandiose were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial valves, the quantity of rooms demanded at the Peacock from rooms per night to hotel rooms at the Peacock and hotel rooms at the Grandiose are rooms per night. Because the cross-price elasticity of demand is Peacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause it's total revenue to Decreasing the price will always have this effect on revenue when Peacock is operating on the portion of its demand curve.