Calculate Impact On Income Using Demand Function

Question

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:

Qh = 2,000 – Ph – 1.5Pc -2.25Pse + 0.6Poh + .02M

Where Ph is the price of room at your hotel, Pc is the price of concerts in your area, Pse is the price of sporting events in your area, P0h 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 hotel reservations of a \$400 increase in income?

Summary

This question belongs to micro economics and discusses about increase in income using demand function

Total Word Count 33

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