A 300-room hotel in Las Vegas is filled to capacity every night at $80 a room....

A 300-room hotel in Las Vegas is filled to capacity every night at $80 a room. For each $1 increase in rent, 3 fewer rooms are rented.

At what rate should the rooms be rented to produce the maximum revenue and how many rooms are rented at that rate? What is the maximum revenue? Write your results in a sentence as what each number means and represents. Please include all steps needed

Solutions

Expert Solution

To find maximum revenue we have to find revenue in terms of single variable and then have to use following procedure

For relative maximum or minimum

To maximize or minimize a function f(x) 1st we need to find its critical points

For critical points we need to put differentiation of f(x) equal to zero i.e. f '(x) = 0

Then check second derivative of f(x) i.e. f ''(x) is positive or negative at critical numbers If f ''(x) >0 then that gives minimum value of f(x) and if f ''(x) <0 then that give maximum value of f(x)

milcah answered 1 year ago

Next > < Previous

Related Solutions

1. On a hot day in Las Vegas an empty diesel truck (capacity = 40,000 L)...

1. On a hot day in Las Vegas an empty diesel truck (capacity = 40,000 L) is filled with diesel fuel [ = 9.1 x 10-4 (Co)-1] at a rate of 200 litres per minute. The truck then travels to the customer in Payson, Utah during which time the temperature drops by 23 K. How long does it take to fill the truck? A. 3 hours and 20 minutes B. 2 hours C. 1 hour D. 10 hours 2. In...

Q: During a televised, title prize fight at a Las Vegas hotel, Luis threw a punch...

Q: During a televised, title prize fight at a Las Vegas hotel, Luis threw a punch which hit Michael in the face. As a result: a: This would ordinarily be an act of negligence, however since Michael consented to the fight, he has no viable legal action against Luis. INCORRECT b: This would ordinarily constitute strict liability for engaging in an inherently dangerous activity, however since Michael consented to the fight, he has no viable legal action against Luis. c:...

The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens Hotel and Casino in Las Vegas, Nevada

9. Application - Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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.

The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens Hotel and Casino in Las Vegas, Nevada.

9. Application: Elasticity and hotel rooms The following graph input tool shows the daily demand for hotel rooms at the Triple Sevens 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 Average American...

The following graph input tool shows the dally demand for hotel rooms at the Triple Sevens Hotel and Casino in Las Vegas, Nevada.

9. Application: Elasticity and hotel rooms The following graph input tool shows the dally demand for hotel rooms at the Triple Sevens 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 Average...

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...

If a hotel sells room nights for $80 with a $20 variable cost per room and...

If a hotel sells room nights for $80 with a $20 variable cost per room and incurs $17,000 in fixed expenses monthly. What is the breakeven revenue? $22,666.97 $22,666.87 $22,666.77 $22,666.67

Summary The cost of renting a room at a hotel is, say $100.00 per night. For...

Summary The cost of renting a room at a hotel is, say $100.00 per night. For special occasions, such as a wedding or conference, the hotel offers a special discount as follows. If the number of rooms booked is: at least 10, the discount is 10% at least 20, the discount is 20% at least 30, the discount is 30% Also if rooms are booked for at least three days, then there is an additional 5% discount. Instructions Write a...

] The average cost per night of a hotel room in San Francisco is $550 with...

] The average cost per night of a hotel room in San Francisco is $550 with a standard deviation is $150 based on a sample of 50 hotel room rates. a) Clearly state what the random variable in this problem is? b) What is an appropriate distribution to be used for finding the confidence intervals for this problem and why? c) Construct a 99% confidence interval estimate on the mean of all hotel room rates. d) What is the 90%...

Subjects