1. Caribbean economies tend to rely heavily on the Tourism sector, offering Sun, Sea and Sand as the “tourism product” for which tourists purchase hotel accommodations to enjoy. Hoteliers offer these services and are therefore major “suppliers” in this market. In 2017 however, several natural disasters affected the Caribbean, resulting in economic, environmental and human losses. In order to analyze the impact of these Natural Disasters on the hotel industry, answer the following questions. a. With the use of an appropriate demand and supply diagram for hotel rooms (accommodation), illustrate and explain how the news of an impending Tropical Storm to the Caribbean region would affect the market price (hotel rates) and quantity traded of hotel rooms. b. Following the destruction of hotel infrastructure from the passage of the Hurricanes, use an appropriate demand and supply diagram for hotel rooms (accommodations) to illustrate and explain the impact of the Hurricanes on the market price and quantity traded of hotel rooms. c. Giving ONE (1) appropriate reason, explain whether you think the demand for Hotel Accommodation in the Caribbean is price elastic or price inelastic. d. Illustrate and discuss with the use of an appropriate diagram showing the price elasticity of demand based on your answer for part (c), suggest whether a price increase or price decrease for hotel accommodation will be beneficial to the hoteliers.
1. Caribbean economies tend to rely heavily on the Tourism sector, offering Sun, Sea and
Sand as the “tourism product” for which tourists purchase hotel accommodations
to enjoy. Hoteliers offer these services and are therefore major “suppliers” in this
market.
In 2017 however, several natural disasters affected the Caribbean, resulting in
economic, environmental and human losses. In order to analyze the impact of
these Natural Disasters on the hotel industry, answer the following questions.
a. With the use of an appropriate
(accommodation), illustrate and explain how the news of an impending Tropical Storm
to the Caribbean region would affect the market
of hotel rooms.
b. Following the destruction of hotel infrastructure from the passage of the Hurricanes, use
an appropriate demand and supply diagram for hotel rooms (accommodations) to
illustrate and explain the impact of the Hurricanes on the market price and quantity
traded of hotel rooms.
c. Giving ONE (1) appropriate reason, explain whether you think the demand for Hotel
Accommodation in the Caribbean is price elastic or price inelastic.
d. Illustrate and discuss with the use of an appropriate diagram showing the price
elasticity of demand based on your answer for part (c), suggest whether a price
increase or price decrease for hotel accommodation will be beneficial to the hoteliers.
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