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In: Economics

A large city hotel serves two types of customers/guests: general visitors (gv), and convention attendees (ca)....

A large city hotel serves two types of customers/guests: general visitors (gv), and convention attendees (ca). Their respective daily demand functions are: For the general visitors segment Q gv = 1,400 – 10 Pgv, and for the convention attendees segment Qca = 2,400 -20 Pca. The marginal cost for serving an additional guest is the same, regardless of the type of customer, and the hotel’s daily Total Cost function is: T.C. = 18,200 + 30 Q.

  1. With price discrimination, how many rooms should this hotel offer to in each market segment, and what rate (price) should it charge to each group of customers?
  2. What would this hotel’s daily profits be?
  3. What would the mark-up, as a percentage of the membership price, be in each market segment?

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Rahul Sunny answered 2 years ago
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