Microeconomics homework

Reply Tue 19 May, 2015 03:26 pm
Assume that the hotel room market in some country satisfies the following set of assumptions:
- the market is perfectly competitive
-the market is presently in long run equilibrium
-all hotels are the same.
a) Graph the present long run equilibrium situation for both a hotel and teh entire hotel industry in that country (Put the number of hotel rooms on horizontal axis). Give a brief explanation for graphs.
b) Suppose that World Travel Organization publishes the report, cautioning travelers about the risks of travelling to that country. Travelers are adviced to exercise causuion since protests, often at short notice, can be expected across major cities in that country. Travelers are also adviced not to stray from the roads and major routs without an experienced guide because there are many landmines that have not been cleared. The report states that the crime rate is relatively high. Therefore, travellers should avoid dark and unlit streets and stairways, avoid showing large sums of money in public and not to use ATMs after dark, etc. This puts a real dumper on traveler's desire to travel to that country.

Explain and indicant on the graphs for the previous part what will happen to in hotel business to price, quantity and profits in the short run and long run. Be sure to discuss and graphically point out both the effect on the individual hotel and the entire hotel market.

c) Suppose that community successfully lobbies the government to place some responsibilities on the hotels regarding the patron's security during their stay in the hotels. The government has decided that the following security measures should be implemented within the premises of hotels in order to enhance the safety of tourists: 1) 24- hour surveillance (monitoring control room); 2) 24-hour watchmanship on the hotel premises; and 3) electronic locking system. Explain how your answer to part above (part b) would be altered.

This is one of the examples that I have to do in order to win some points for my course, and I should submit it in 7 hours from now on. I hope someone will help me since I have just started course and I don't know how to do it properly. Thank you very much
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