Hotel Rooms in Radnor, PA go for $100 a day and 1,000 rooms are rented per day

Hotel Rooms in Radnor, PA go for $100 a day and 1,000 rooms are rented per day. To raise revenue, the Township Manager decides to charge a hotel tax of $10 per rented room. After the tax is imposed, the going rate for a hotel room is $108 ( the hotel decides to become efficient and not pass on the entire tax to the customer) and the number of rooms rented falls to 900.

The Township Manager then decides to double the tax to $20 per room. The hotel now charges $116 per room and the number of rentals per day falls to 800.