Assume That You Own a Small Boutique Hotel

question 210

Multiple Choice

Assume that you own a small boutique hotel.In an attempt to raise revenue, you reduce your rates by 20 percent.However, your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

• A)Boutique hotel rooms are inferior goods.
• B)Demand is inelastic.
• C)The demand curve for your hotel rooms is vertical.
• D)Demand is elastic.

---

Definitions:

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account to cover potential losses.

T-bill Rate

The yield or interest rate on Treasury bills, which are short-term debt securities issued by the U.S. government.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.

Spot Price

The present market cost at which an asset can be purchased or sold for instant delivery.