As the Manager of a Local Hotel Chain,you Have Hired

question 9

Essay

As the manager of a local hotel chain,you have hired an econometrician to estimate the demand for one of your hotels (H).The estimation has resulted in the following demand function:
Q_H = 2,000 - P_H - 1.5P_C - 2.25P_SE + 0.8P_OH + 0.01M,where P_H is the price of a room at your hotel,P_C is the price of concerts in your area,P_SE is the price of sporting events in your area,P_OH is the average room price at other hotels in your area,and M is the average income in the United States.What would be the impact on your firm of:
a.A $500 increase in income?
b.A $10 reduction in the price charged by other hotels?
c.A $7 increase in the price of tickets to local sporting events?
d.A $5 increase in the price of concert tickets,accompanied by an $8 increase in income?

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Definitions:

Oligopoly

A market structure dominated by a small number of firms, leading to limited competition and possibly higher prices for consumers.

Utilitarianism

An ethical theory that suggests the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.

Moral Philosophy

The branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.

Ethical Behavior

Conducting oneself in a manner that adheres to principles of morality and fairness in all aspects of life, including business practices.