Question

Work & Rest is an all inclusive hotel operating as a monopoly in a mid-sized community. The manager estimates that the hotel's total costs are described by the equation C = 0.05Q2 + 10Q + 15000, where Q is the number or persons serviced and P is the price paid per person. Although it is located in a mid-sized community, it is close to a major highway that runs along the east coast. Often times, travelers would use the services of Work & Rest as a stop in their commute between two major citys. As such, the market demand for its service is described by the equation P = 160 - 0.2Q. 1. Given the current market conditions, Work & Rest's profit-maximizing quantity is Blank 1 and the price charged per person is Blank 2 ( 4 points) Consider that after a series of reports from special interest groups, the local government decides to regulate Work & Rest by using the optimal pricing policy. 2. Given the successful implementation of the government's policy, Work & Rest's profit-maximizing quantity is Blank 3 (2 points) 3. Given the successful implementation of the government's policy, what is Work & Rest's profit at its profit maximizing quantity? Blank 4 (4 points)I 4. If the policy remains in place, and there are no further external shocks to the market, is it likely that West & Rest will continue to operate and provide service? (In the space provided enter will or will not) In the long run, West & Rest Blank 5 continue to provide service in this mid-sized community. (2 points)

Answer 1