La Villa is a village in the Italian Alps. Given its enormous popularity among skiers its beds are always booked in the winter season and there are,

* On average, 1200 skiers in the village.

* On average the skiers stay for 10 days.

a. How many new skiers are arriving- on average- in La Villa every day?

1200 skiers in the village have been accumulated over a period of 10 days. So per day the rate of arrival is: 1200/10 = 120

b. A study done shows that :

* Skiers spend on average $50 per person on the first day. * Skiers spend on average $30 per person on each additional day in local restaurants. * The study also forecast that – due to increased hotel prices - the average stay for the 2003-2004 season will decrease to 5 days. * What will be the percentage change in revenues of local restaurants compared to last year when skiers stayed for 10 days. Assuming that hotels continue to be fully booked?

Answer:

* For 10 day stay

* Total Amount spent on the first day by 1200 Skiers is : * 1200 x 1 x $50 = 60000

* Total Amount spent on the each additional days(9 days left) by 1200 Skiers is : * 1200 x 9 x $30 = 324000

* For 5 day stay (2003-2004 season)

* Total Amount spent on the first day by 1200 Skiers is : * 1200 x 1 x $50 = 60000

* Total Amount spent on the each additional days(9 days left) by 1200 Skiers is : * 1200 x 4 x $30 = 144000

* Total amount spent by Skiers staying 10 Days over 10 days is 384000 * Total amount spent by Skiers staying 5 Days over 10 days is 408000 * Change in revenues of local restaurants compared to last year when skiers stayed for 10 days is 24000 * Percentage change = 6.25%

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