Question: The market demand and supply functions for hotel rooms in the City of Vancouver are estimated as follows:

Demand: P = 500 - .0005Q
Supply: P= -1500 + .002Q

a) Determine the equilibrium price ( p) and the quantity exchanged (q) of the hotel rooms in the city. Sketch the demand/supply diagram and indicate
all key values. How much is spent annually on hotel accommodations in the city?

b) The city council is debating a motion to introduce a hotel tax in the city of $10 per room per night. The mayor in a recent press conference
assured hotel operators that the impact of the tax on the operations will be minimal since the tax is intended to be paid by tourists, who once they book
their room have little choice in paying the tax. Do you agree? (Calculate the impact of the room tax on equilibrium P and Q and support your answer
with sound economic reasoning) Which is relatively less elastic, the demand or the supply for the rooms?