Question

In: Economics

Suppose an​ ocean-front hotel rents rooms. In the​ winter, demand​ is: P1 = 110 - 1Q1...

Suppose an​ ocean-front hotel rents rooms. In the​ winter, demand​ is:

P1 = 110 - 1Q1

with marginal revenue​ of:

MR1 = 110 - 2Q1

​However, in the​ summer, demand​ is:

P2 = 260 - 1Q2

with marginal revenue​ of::

MR2 = 260 - 2Q2

Furthermore, suppose the​ hotel's marginal cost of providing rooms is MC= 5 + 1Q which is increasing in Q due to capacity constraints.

Suppose the hotel engages in​ peak-load pricing. During the​ winter, the​ profit-maximizing price is $_______ and the​profit-maxizing quantity is _______ rooms.

During the​ summer, the​ profit-maximizing price is $______ and the​ profit-maximizing quantity is _______.

The marginal cost of production is higher during the _______ (Summer/Winter) during which time the hotel charges a _______ ( Higher/ Lower) price.

Solutions

Expert Solution

NOTE:-- Please comment if you face any difficulty in understanding the solution. Please Upvote. Thank you.

******************please please like my answer Your one like is very helpful for me******************

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Glitz hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of...
Glitz hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of 400 rooms per night, Glitz currently makes a profit of $30/room:                                         Per room Sales                                 $120 Costs                                     90 Profit                                    30 It costs Glitz $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs). Glitz has been approached by Conventions2000.com to purchase a block of 300 rooms for $80/room per night. If this special...
Sector hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of...
Sector hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of 400 rooms per night, Glitz currently makes a profit of $30/room:                                    Per room Sales                          $120 Costs                              90 Profit                              30 It costs Sector $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs). Sector has been approached by Conventions2000.com to purchase a block of 300 rooms for $80/room per night. If this special...
Donna Shader, manager at the Winter Park Hotel, is considering how to restructure the front desk...
Donna Shader, manager at the Winter Park Hotel, is considering how to restructure the front desk to reach an optmum level of staff efficiency and guest service. Presently, the hotel has five clerks on duty, each with a separate waiting line, during the peak check in time of 3:00 P.M to 5:00 P.M. Observation of arrivals during this time show that an average of 90 guests arrive each hour (although there is no upward limit on the number that could...
Problem 1 The King Hotel has 400 rooms. Each room rents for $62 per day and...
Problem 1 The King Hotel has 400 rooms. Each room rents for $62 per day and has a variable cost of $12 per day. The hotel’s monthly fixed costs are $450,000. (Assume that each month has 30 days.) Required: 1. Compute the breakeven point in rooms rented. 2. Compute the daily occupancy percentage that the hotel must have in order to break even. 3. Compute the total number of rooms that must be paid for and occupied per month to...
Application: Elasticity and hotel rooms. The following graph input tool shows the daily demand for hotel...
Application: Elasticity and hotel rooms. The following graph input tool shows the daily demand for hotel rooms at the Big Winner Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value...
Avila Hotel has 300 rooms and charges $120 per room. The hotel estimates that the demand...
Avila Hotel has 300 rooms and charges $120 per room. The hotel estimates that the demand for the rooms follows a uniform distribution between 270 and 330 each day. Reservations may be canceled by 6pm with no penalty. The hotel estimates that 3% of the reservations are canceled by 6pm. Hence, the hotel allows overbooking by 20 room (the hotel allows up to 320 customers to make reservation). When more customers arrive than can be handled (e.g., more than 300...
suppose that a hotel has 100 rooms and the hotel is accepting overbooking anticipating some cancellations....
suppose that a hotel has 100 rooms and the hotel is accepting overbooking anticipating some cancellations. The probability for cancellation is 0.07. a) What is the probability that somoen who made a reservation will be turned away if this hotel has allowed for 110 resevations? b. 105 reservation c. why did the answer to part b go down
5. When consumer demand for hotel rooms increases, the average selling prices for those rooms typically...
5. When consumer demand for hotel rooms increases, the average selling prices for those rooms typically increase as well. In the foodservice business that has not historically been the case. Fluctuations in consumer demand (e.g., volume differences between high demand Saturday nights and lower­volume Sunday nights) in restaurants do not typically result in menu price changes. Given that both hotels and restaurants are part of the hospitality industry, how do you account for these fundamental differences in approach toward strategic...
The daily demand for hotel rooms on Miami in Florida is given by the equation Qd=...
The daily demand for hotel rooms on Miami in Florida is given by the equation Qd= 150,000 – 275P. The daily supply of hotel rooms on Miami is given by the equation Qs= 25,000 +312.5P. Diagram these demand and supply curves in the price. What is the equilibrium price and quantity of hotel rooms on Miami?
(a) The daily demand for hotel rooms in Greater Toronto Area (GTA) is given by the...
(a) The daily demand for hotel rooms in Greater Toronto Area (GTA) is given by the equation: QD = 230–35P. The daily supply of hotel rooms GTA is given by the equation: QS = 13+19P. What are the equilibrium price and the quantity of hotel rooms? 6 marks (b) Suppose the demand for a bushel of Corn in 2000 was given by the equation QD = 2550–166P. At a price of $4.46 per bushel, what is the price elasticity of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT