The inverse demand curve facing a resort hotel is during the low season and PL = 100 - QL PH =400 – QH during the high season. The resort's marginal cost is $50 per night in cleaning costs for the room and general maintenance and administration. The resort only has 100 rooms. What is the resort's profit-maximizing peak-load pricing strategy? Illustrate the solution in a diagram. 1.) Using the point drawing tool, indicate the profit-maximizing price during the low season. Label this point 'e.' 2.) Using the point drawing tool, indicate the profit-maximizing price during the high season. Label this point 'e.' Carefully follow the instructions above, and only draw the required objects. p. $ per night 400- 350- 300- 250- 200- 150- 100- 50- 0- 0 MR D 50 100 AMR 150 200 250 300 Q. Rooms per night MC DH 350 400 Q

The inverse demand curve facing a resort hotel is during the low season and PL = 100 - QL PH =400 – QH during the high season. The resort's marginal cost is $50 per night in cleaning costs for the room and general maintenance and administration. The resort only has 100 rooms. What is the resort's profit-maximizing peak-load pricing strategy? Illustrate the solution in a diagram. 1.) Using the point drawing tool, indicate the profit-maximizing price during the low season. Label this point 'e.' 2.) Using the point drawing tool, indicate the profit-maximizing price during the high season. Label this point 'e.' Carefully follow the instructions above, and only draw the required objects. p. $ per night 400- 350- 300- 250- 200- 150- 100- 50- 0- 0 MR D 50 100 AMR 150 200 250 300 Q. Rooms per night MC DH 350 400 Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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