Answer to Question #52710 in Microeconomics for Yana
- the market is perfectly competitive
-the market is presently in long run equilibrium
-all hotels are the same.
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.
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