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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.

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