A common room pricing strategy used by hotels is to price each day for which this room can be reserved, as discussed in the lecture. The price of a stay is then the sum of the day prices spanned by the stay (i.e., checkin and checkout dates). Full-service airlines, as you may already know, typically price itineraries. a. Explain the differences between day pricing of hotel rooms and the pricing of airline itineraries? (i.e. What is the product?, What is the resource?, and What is being priced?) b. Consider the purchase of a customized laptop on Dell’s website. Customization involves choosing laptop components that have different price points. The choice of components determines the ultimate price of the laptop. Explain why the day pricing of hotel rooms is a special case of the problem of pricing laptop components being shown to customers in Dell’s website. c. Why is Dell’s pricing problem more complicated than the pricing problem faced by a hotel?

. The relationship between marginal and average costs

Consider the following scenario to understand the relationship between marginal and average values. Suppose Van is a professional basketball player, and his game log for free throws can be summarized in the following table.

Fill in the columns with Van’s free-throw percentage for each game and his overall free-throw average after each game.

On the following graph, use the orange points (square symbol) to plot Van’s free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game.

Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Game Free-Throw PercentageAverage Free-Throw Percentage0123451009080706050403020100FREE-THROW PERCENTAGEGAME

You can think of the result in any one game as being Van’s marginal free-throw percentage. Based on your previous answer, you can deduce that when Van’s marginal free-throw percentage is below the average, the average must be   .

You can now apply this analysis to production costs. For a U-shaped average total cost (ATC) curve, when the marginal cost curve is below the average total cost curve, the average total cost must be   . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be   . The

QUESTION 2  

According to Michael Theatre Ltd., the mean cost to run a nightly theatre performance is $3,200 with a standard deviation of $460. Performance costs are known to follow a normal probability distribution.

Required:

1. What percentage of the performances will cost less than $2,850 to run? Sketch a normal curve and shade the desired area on your diagram. ( 4 marks)
2. What percentage of the performances will cost between $3,250 and $3,520 to run? Sketch a normal curve and shade the desired area of your diagram. ( 4 marks)
3. What percentage of the performances will cost between $2,300 and $3,520 to run? Sketch a normal curve and shade the desired area on your diagram. ( 4 marks)
4. What percentage of the performances will cost less than $3,750 to run? Sketch a normal curve and shade the desired area of your diagram. Also, Six percent (6 %) of all shows will cost less than what dollar amount? Sketch a normal curve and shade the desired area of your diagram. ( 8 marks)

I Need the full calculation and explanation of the answers.

A DOT is performing a benefit-cost analysis of a new highway using an analysis period of 40 years as part the required environmental impact assessment of the project. The section of highway is estimated to have a construction cost $220 million dollars. The public benefit in reduced travel time and economic development around the highway is estimated to be $17 million per year for the first 5 years, then decrease by 3% per year for the remainder of the 40 year analysis period as congestion grows and economic development slows. The public disbenefit is estimated to be $2 million dollars in year 0 due to additional congestion and pollution during construction, then average $160,000 per year over the 40-year project life in environmental costs due to increased runoff and vehicle emissions. Using an interest rate of 4%, determine the benefit-cost ratio for this project using public/government version of the B/C ratio. Express your answer to two decimal places.

You need to develop a preliminary estimate for a 5” thick, Heavy Industrial, Reinforced Concrete Slab on Grade. What are the costs/SF for material, installation, and total for this slab on grade construction? What is the total cost if the slab on grade is 80,000 SF?

One of the key questions decision makers must ask when considering whether to invest in a new technology is “what will the return on investment (ROI) be?” In other words, will this technology pay for itself, and when?

Consider an amusement park called FunTown. Funtown is a popular amusement park but because of long entrance lines to the park, yearly attendance has been flat (no increase or decrease) for the last 3 years. Unless something is done to alleviate the long entrance lines, attendance is not expected to increase for the next 3 years.

Funtown is considering implementing a handheld scanner system that can allow employees to walk around the front gates and accept credit card payment and print tickets on the spot. With the new scanner system, Funtown anticipates selling 2.4 million tickets in the next year (year 1), with a 4% increase (over the previous year) for the 2 years after that (years 2 and 3). Without the handheld scanner, Funtown anticipates selling 2.4 million tickets per year for the next 3 years.

The handheld scanner system is not without cost. Entrance to Funtown costs 35 dollars. For every ticket sold with the online scanner system, there is an expense of 6% of the ticket price.

It will take a while for the new system to catch on. Funtown estimates that 10% of year 1 attendance tickets will be sold using the online scanner. They also estimate that will grow to 20% and 30% in years 2 and 3 respectively.

Your assignment is to do a 3 year analysis of this proposal and determine if and when this scanner system will pay for itself.

Specifically, you are to calculate the net revenue of Funtown for each of the next 3 years, with, and without the new scanner system, and calculate the difference.

PERFORMANCE EVALUATION

Julie Miller supervisor of housecleaning for Hotel Minto, was surprised by her summary report for March given below.

Julie was disappointed. She thought she had done a good job controlling housekeeping labor and towel usage, but her performance report revealed an unfavorable variance of $12,111. She had been hoping for a bonus for her good work, but now expected a series of questions from her manager.

The cost budget for housekeeping is based on standard costs. At the beginning of a month, Julie receives a report from Hotel Minto’s Sales Department outlining the planned room activity for the month. Julie then schedules labor and purchases using this information.

The budget for the housekeeping was based on 8,000 room nights. Each room night is budgeted based on the following standards for various materials, labor, and overhead:

With 8,900 room nights sold, actual costs and usage for housekeeping during April were:

Required:

You have been asked to re-evaluate Julie’s performance.

Prepare a report to Julie’s boss demonstrating and explaining your findings; including your suggestions for performance evaluation methods and measures in the future.

QUESTION 11

In the short-run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is

QUESTION 12

Assume that a firm's marginal revenue barely exceeds marginal cost. To maximize profit, teh firm should:

QUESTION 13

In the short run, a perfectly competitive firm will stay in business as long as:

QUESTION 14

Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC), and the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would:

QUESTION 15

Where is the "short-run shut down point" for a perfectly competitive firm?