Another Economics Question?

[KONA]

The Red Jacket Mountain View Inn in New Hampshire charges $99 per room in the winter ski season and $94 during the summer months. The number of rooms and operating costs are constant year round. These prices indicate:

a. rightward shifts in the demand curve in the summer.
b. a rightward shift in demand in the winter.
c. leftward shifts in the supply curve in the summer.
d. a leftward shift in demand in the winter.
e. all of the above.

...and why?

[JoeyIngles]

The clue comes from the statement, "number of rooms and costs are constant."
This is the supply of rooms, so "c" cannot be right and neither can "e"

"A" and "D" essentially say the same thing, that the demand shifts right in the summer and left in the winter. Both of these are inaccurate. In fact, the demand curve shifts left in the summer to indicate less demand and right in the winter to show more demand.

B is the correct answer. As demand increases, the demand curve will shift to the right. Demand for Ski lodges will go up in the winter so the curve will show a greater demand and thus a higher price in the winter.

Got it?