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Question

Visitors to Vail from Denver spend $1,000,000 each Labor Day weekend, with 70% of that amount being spent in Vail itself. Residents of Vail spend $100,000 on recreation in Vail that weekend as well. Visitors to Vail from New Mexico and Arizona spend $500,000, 70% of which is spent in Vail and 90% spent in Colorado. The local and state value added (profit margin) on sales is the same and equal to 30%. Businesses located in Vail make 40% of their purchases in Vail and an additional 25% of their purchases in the rest of the State of Colorado. For this exercise assume that consumers spend 95% of any additional income they receive.

3.a Vail Impact Area

Calculate the income multiplier and total income generated in Vail on Labor Day weekend using Vail as the Impact Area. Show your work.

3.b. State of Colorado Impact Area

Calculate the income multiplier and total income generated to the State of Colorado as a result of recreation in Vail on Labor Day weekend. Show your work.