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    Derive demand for hotel rooms

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    A sudden discovery of an enormous gold mine in Florida would mean a _______

    a.Rightward shift in the supply curve for gold.

    b.Rightward shift in the demand curve for gold.

    c.Leftward shift in the supply curve for gold.

    d.Leftward shift in the demand curve for gold.

    In a shorefront tourist town, a hurricane washes away the beach. All of the town's hotels, however, are still intact.

    a.Does the supply curve for hotel rooms shifts to the left, shift to the right, or stay in the same place?

    b.Does the demand curve for hotel rooms shifts to the left, shift to the right, or stay in the same place?

    c.After the hurricane, what happens to the equilibrium price and quantity of hotel rooms?

    d.Suppose the neighboring town still has its beach. After the hurricane, what happens to the market for hotel rooms in that town?

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    Solution Preview

    Question 1: A sudden discovery of an enormous gold mine in Florida
    answer: a. Rightward shift in the supply curve for gold. It implies the supply for gold increases. All other factors influencing the supply for gold stay the same, quantity supplied will increase for every given prices.

    Question 2:
    a.Does the supply curve for hotel rooms shifts to ...

    Solution Summary

    Demand for hotel rooms is derived from the demand for beach. As the demand for beach increases and other factors stay the same, the demand for hotel rooms will also increase. In this case the demand curve for hotel rooms will parallely shift to the right. Quantity demanded for hotel rooms will increase at every given prices. Likewise, for any factor causing a demand for beach to decrease, a demand for hotel rooms will also decrease. As a result, the demand curve for hotel rooms will shift to the left. Quantity demanded for hotel rooms will decrease at every given prices.

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