The following graph input tool shows the daily demand for hotel rooms at the Big Winner 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	$50,000 per year
Roundtrip airfare from Los Angeles (LAX) to Las Vegas (LAS)	$250 per roundtrip
Room rate at the Lucky Hotel and Casino, which is near the Big Winner	$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

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 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Big Winner from

rooms per night to

rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Big Winner are .

If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 roundtrip, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Big Winner from

rooms per night to

rooms per night. Because the cross-price elasticity of demand is , hotel rooms at the Big Winner and airline trips between LAX and LAS are .

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 . Decreasing the price will always have this effect on revenue when Big Winner is operating on the portion of its demand curve.

11:08 ON . 4G: 28% ng.cengage.com/staticb/ 26 . . . se the graph input tool to help you answer the Jestions. You will not be graded on any chang aph. ote: Once you enter a value in a white field, t orresponding amounts in each grey field will ccordingly. Graph Input Tool 500 Market for Big Winner's Hotel Rooms 450 Price 350 (Dollars per room) 400 Quantity Demanded 150 350 (Hotel rooms per night) 300 250 Demand Factors 200 Average Income 50 150 (Thousands of dollars) Demand Airfare from LAX to 100 LAS 250 (Dollars per roundtrip) 50 Room Rate at Lucky 200 Dollars per night) 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) or each of the following scenarios, begin by emand factors are set to their original values arging $350 per room per night. average household income increases by 20 60,000 per year, the quantity of rooms demar /inner from rooms per night to ght. Therefore, the income elasticity of dem