SOLUTION: The demand plan for hotel rooms is as follows: Price (dollars per night) Quantity demanded (millions of rooms per night) 200 100 250 80 400 50 500 40 800 25 1000 20 a. What happens

Algebra ->  Percentage-and-ratio-word-problems -> SOLUTION: The demand plan for hotel rooms is as follows: Price (dollars per night) Quantity demanded (millions of rooms per night) 200 100 250 80 400 50 500 40 800 25 1000 20 a. What happens      Log On


   

Question 1203714: The demand plan for hotel rooms is as follows: Price (dollars per night) Quantity demanded (millions of rooms per night) 200 100 250 80 400 50 500 40 800 25 1000 20 a. What happens to the total income if the price drops from $400 to $250 per night? Calculate the price elasticity of demand for that price range and indicate what type of elasticity occurs.
Found 2 solutions by MathLover1, ikleyn:
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!

Price (dollars per night)....... Quantity demanded (millions of rooms per night)
200.......................................... 100+
250 ..........................................80+
400.......................................... 50+
500.......................................... 40+
800.......................................... 25+
1000.......................................... 20+

a.
What happens to total revenue when the price falls from $400+to+%24%7B%7B%7B250 a night and from $250 to $200 a night?
When the price is $400, the total revenue is equal to $400+%2A+50+million rooms, or $20 billion.
When the price is $250, the total revenue is equal to $250+%2A+80+million rooms, or $20 billion.
So the total revenue does not change when the price falls from $400 to $250 a night.
When the price is $250, the total revenue is equal to $250+%2A+80 million rooms, or $20 billion. When the price is $200, the total revenue is equal to $200+%2A100 million rooms, or $20 billion.
So the total revenue does not change when the price falls from $400 to $250 a night.

b. Is the demand for hotel rooms elastic, inelastic or unit elastic?
The total revenue is the same at all prices, $20 billion. Because a change in price does not change the total revenue at any price, the demand is unit elastic at all prices.


Answer by ikleyn(52816) About Me  (Show Source):
You can put this solution on YOUR website!
.

In the post by  @MathLover1,  calculations are incorrect,

while the logic and the reasoning both are orthogonal to common sense.


Everything in this problem is  SO  CLEAR,  that I will not go deeper inside.
Everything is of the complexity level 3-2 = 1.


My advise to the future readers of her post is do not take it seriously.


Cover your eyes with duct tape and plug your ears with cotton so you don't see or hear it,
for the safety of your mind.