Sox Shogun Hotel sold 2,000 rooms during the past month at an ADR of $70.00. During...

Sox Shogun Hotel sold 2,000 rooms during the past month at an ADR of $70.00. During this month, the ADR is increased by $7.00 and the total number of rooms sold is 1,900. What is the price elasticity of demand? What is the effect of the decrease in the #of rooms to the total room revenue for the Sox Shogun Hotel during this month?

Group of answer choices

$5,600 decrease

$6,300 increase

$6,300 decrease

$5,600 increase

Solutions

Expert Solution

Sox Shogun Hotel sold 2,000 rooms during the past month at an ADR of $70.00. During this month, the ADR is increased by $7.00 and the total number of rooms sold is 1,900

Percentage change in quantity demanded = 100/2,000

= 5%

Percentage change in price = 7/70

= 10%

price elasticity of demand = Percentage change in quantity demanded/Percentage change in price

= 5%/10%

= 0.5

Total room revenue in the previous month = Number of rooms sold x ADR

= 2,000 X 70

= $140,000

Total room revenue in the Current month = Number of rooms sold x ADR

= 1,900 X 77

= $146,300

Increase in total room revenue = 146,300 - 140,000

= $6,300

total room revenue for the Sox Shogun Hotel will increase by $6,300 during this month

Second option is the correct option

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and...

Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and variable costs (VC) of the two room types are provided in the table below: (Hint: Treat two room types as two different products.) ADR ($) Variable Cost ($) Standard rooms 394.50 256.43 Deluxe rooms 631.20 366.10 ...

Problem 2. Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR)...

Problem 2. Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and variable costs (VC) of the two room types are provided in the table below: (Hint: Treat two room types as two different products.) ADR ($) Variable Cost ($) Standard rooms 461.20 299.78 Deluxe rooms 737.92 427.99 The Mock Hotel's fixed costs for a month is = = 295168 Sales mix (contribution of each room type to total room revenue) of the hotel is: Deluxe...

A hotel chain wants to estimate the average number of rooms rented daily in each month....

A hotel chain wants to estimate the average number of rooms rented daily in each month. The population of rooms rented daily is assumed to be normally distributed for each month with a standard deviation of 24 rooms. During January, a sample of 16 days has a sample mean of 48 rooms. This information is used to calculate an interval estimate for the population mean to be from 40 to 56 rooms. What is the level of confidence of this...

Q1 During December 2009, Fashion Vixen Publishing sold 2,000 12-month annual magazine subscriptions at a rate...

Q1 During December 2009, Fashion Vixen Publishing sold 2,000 12-month annual magazine subscriptions at a rate of $20 each. The first issues were mailed in February 2009. Prepare the entries on Fashion Vixen’s books to record the sale of the subscriptions and the mailing of the first issues. Q2 On December 1, B-win Company introduces a new product that includes a one-year warranty on parts. In December, 200 units are sold. Management believes that 2% of the units will be...

Sold boards during Nov is shown below.... During the same month, this company sold 248 boards....

Sold boards during Nov is shown below.... During the same month, this company sold 248 boards. Uses a periodic inventory system. date explanation units unit cost total cost nov 1 inventory 53 $100 $5300 nov 12 purchase 92 104 9568 nov 19 purchase 41 108 4428 nov 26 purchase 103 113 11635 totals 289 $30935 A) ---- Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. FIFO LIFO The ending inventory...

Consider the following two products: ‘coffee’ sold in a café and ‘hotel accommodation’ in Sydney during...

Consider the following two products: ‘coffee’ sold in a café and ‘hotel accommodation’ in Sydney during the Olympic Games. Which product would have a higher price elasticity of supply in absolute value? Explain your answer including identifying the determinant of elasticity. (1 mark) – Word count 60 GIVE THE ANSWER WITH THE DETERMINENTS OF SUPPLY. SUCH AS 1.Length of time involved in production. 2.Availability of inputs. 3. Existing capacity. 4. Inventories held. 5. Type of industry. ALSO INCLUDE WHAT KIND...

CM Designs manufactures sportswear. During the month, the company produced 2,000 tops as part of Job...

CM Designs manufactures sportswear. During the month, the company produced 2,000 tops as part of Job 9501. Amounts charged to Job # 9501 for the month: Direct materials $24,000; Direct labor $6,000; MOH $48,000 150 defective tops would be considered normal spoilage on a job of this size. Tops that don't meet quality standards are sold as "seconds". Regular sales price per top $ 69.95 Seconds sales price per top $ 15.95 1) Assume that 200 tops failed to meet...

During the past month, the following costs were incurred in the three production departments and two...

During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration − 0.40 0.30 0.20 0.10 Factory support 0.15 − 0.15 0.15 0.55 Direct cost $ 680,000 $ 1,350,000 $ 1,760,000 $ 288,000 $ 258,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...

During the past month, the following costs were incurred in the three production departments and two...

During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration ? 0.40 0.20 0.10 0.30 Factory support 0.10 ? 0.10 0.20 0.60 Direct cost $ 570,000 $ 1,295,000 $ 1,650,000 $ 277,000 $ 247,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...

During the past month, the following costs were incurred in the three production departments and two...

During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration − 0.40 0.30 0.20 0.10 Factory support 0.10 − 0.30 0.10 0.50 Direct cost $ 520,000 $ 1,270,000 $ 1,600,000 $ 272,000 $ 242,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...

Subjects