A 600​-room hotel can rent every one of its rooms at $90 per room. For each​ $1 increase in​ rent,

3 fewer rooms are rented. Each rented room costs the hotel​ $10 to service per day. How much should the hotel charge for each room to maximize its daily​ profit? What is the maximum daily​ profit?

Science has been recognized as a critical input in good decision making for park managers. How does the use of science benefit park management decisions?

Case 1 (Make Vs. Buy)

After recovering from a previous disaster in 2015, Jurassic World Luxury Resort reopened in early 2017, and business is better than ever. Jurassic World’s bioengineering team, led by Dr. Henry Wu, has designed two brand new dinosaurs named the Pepsisaurus and the Tostidodon (sponsored by PepsiCo). Having learned from past mistakes, Jurassic World’s operations manager, Claire Dearing, has insisted on making two state-of-the-art enclosures to ensure that the Pepsisaurus and Tostidodon do not escape their enclosures and wreak havoc on the theme park. Claire is not sure whether Jurassic World should manufacture the enclosures, or pay Hammond Corp $16,650,000 per enclosure to manufacture them for Jurassic World.

Claire has accumulated the following cost information related to the manufacture of the enclosures:

90% of the traceable fixed manufacturing overhead would be avoided if Jurassic World did not manufacture the enclosures. If Jurassic World did not manufacture the enclosures, it could instead use resources to open a new roller coaster ride that would generate $600,000 of margin.

1. Determine the total relevant costs of Jurassic World manufacturing the two enclosures itself. (1 point for the correct answer in the shaded box)

2. Determine the total relevant costs of Jurassic World paying Hammond Corp to manufacture the enclosures. (1 point for the correct answer in the shaded box)

3. Should Jurassic World manufacture the enclosures itself (MAKE) or pay Hammond Corp to manufacture them (BUY)? Circle One. (1 point for the correct answer)

MAKE                                BUY

Case 2 (Special Order)

While Jurassic World is filled to capacity with tourists most of the year, the theme park experiences a lower number of customers during September and October. This is due to the fact that September and October are “rainy season” in Jurassic World’s location—the island of Isla Nublar, off the coast of Costa Rica.

To celebrate their sponsorship of the Pepsisaurus and the Tostidodon, PepsiCo is interested in holding a 3-day, 2-night corporate retreat for 5,000 of its employees at Jurassic world during September. PepsiCo has told Claire that they would pay Jurassic World $200 per employee. This would provide each employee with three days of park admission, three days of meal and drink vouchers, and two nights of lodging. Additionally, PepsiCo wants Jurassic World to treat its employees to behind-the-scenes tours of the park, which would cost a total of $50,000 to plan and facilitate. Due to the timing of the retreat, Jurassic World has ample capacity to host PepsiCo’s employees.

Claire knows that Jurassic World normally charges $850 per person for a 3-day, 2-night admission, lodging, and meal/drink vacation package. The per person cost for this package is 670, as shown below:

Most of the overhead is the fixed cost of running the theme park, and goes towards marketing, administration, dinosaur bioengineering, customer service, grounds keeping and maintenance, dinosaur food, raptor training, and disaster control. However, $35 is variable with respect to the number of customers in the theme park.

4. Determine the incremental revenue to Jurassic World if Claire accepts PepsiCo’s request. (1 point for the correct answer in the shaded box)

5. Determine the incremental cost to Jurassic World if Claire accepts PepsiCo’s request. (1 point for the correct answer in the shaded box)

6. Should Claire accept PepsiCo’s offer? Circle One. (1 point for the correct answer)

YES                                     NO

You are the revenue manager of a 200-room hotel in Memphis. The management controllable costs (variable room costs) incurred when selling 1 room are $50. You are interested in evaluating hotel performance for two scenarios: fixed pricing and differential pricing.

Scenario one is that you used a fixed pricing strategy: at a selling pricing $200 per night your hotel would sell 150 rooms on a given day.

Scenario two is that you implement a three-price strategy: low rate $150 per night, regular rate $200 per night, and high rate $250 per night. Your hotel would sell 100 low-priced rooms, 60 regular-priced rooms, and 20 high-priced rooms per day.

2. Discuss which scenario generates more revenue for your hotel and why?

4. Leslie has been tasked with putting together a statistical report regarding the use of a particular park in her hometown. Previous data shows that 72% of the residents living in the town visited the park in the last month. She wants to know the probability that more than 98 individuals in a random sample of 150 residents have visited the park in the last month. Please Answer A-C

(a) Based on the information given, is the sample proportion p̂ of residents who have visited the park in the last month approximately normally distributed? Check the appropriate conditions to justify your answer

(b) What is the sample proportion p̂ for Leslies sample of 150 residents? Round your answer to two decimal places?

(c) What is the probability that more than 98 individuals in the random sample of 150 residents have visited the park in the last month?

1. The Public Good Problem A national park that costs MC = 80 dollars to provide to society has been privatized and handed over to a private firm; the firm is mandated to price at marginal cost. There are two types of consumers, a group of high demand consumers (group A) that have an aggregate demand function equal to MB = 100 – Q, and a low demand group of consumers (group B) with aggregate demand equal to MB = 50 – Q, where Q is thousands of acres.

A. How many acres will be provided by the firm when pricing at MC, assuming that the low-demand group will free-ride on the high-demand group?

B. What is the aggregate demand curve for the national park? (Hint: the aggregate demand curve for a public good is the vertical aggregation of the individual demand curves.)

C. Calculate the aggregate consumer surplus for the two types of consumers when the firm prices at MC. (Hint: in this case, the group B is free riding, and they can gain extra consumer surplus)

D. If the national park is provided by the government, how many acres SHOULD be provided?

1. The Public Good Problem

A national park that costs MC = 80 dollars to provide to society has been

privatized and handed over to a private firm; the firm is mandated to price at

marginal cost. There are two types of consumers, a group of high demand

consumers (group A) that have an aggregate demand function equal to MB = 100 –

Q, and a low demand group of consumers (group B) with aggregate demand equal to

MB = 50 – Q, where Q is thousands of acres.

1. How many acres will be provided by the firm when pricing at MC, assuming that the low-demand group will free-ride on the high-demand group?

2. What is the aggregate demand curve for the national park? (Hint: the aggregate demand curve for a public good is the vertical aggregation of the individual demand curves.)

3. Calculate the aggregate consumer surplus for the two types of consumers when the firm prices at M (Hint: in this case, the group B is free riding, and they can gain extra consumer surplus)

4. If the national park is provided by the government, how many acres SHOULD be provided?

Catrina Corporation took out a new insurance policy on their recently built offices. The policy cost $160,000 and covered 24 months, from Oct 1, 20X1 to the end of Sep 20X3. When Catrina prepares its income statement for the year ended 20X1, what amount will be shown as insurance expense? Enter your response as a whole number, no commas, no dollar signs.