1a. When there are no variable costs of running the motel, the profit maximizing price is _______________ and the number of rooms rented is_____________________.

1b. When there are variables costs, the profit maximizing price is _______________ and the number of rooms rented is_____________________.

1. The daily demand for rooms at a motel is given by. Assume that the motel has 40 rooms.

a. If total variable costs of running this motel are zero, find the price that maximizes profit and find the number of rooms rented at that price. Remember that profit is total revenue (i.e., TR = PQ) less total cost (i.e., the sum of variable costs and fixed costs).

b. If the incremental cost of renting a room is $9 find the price that maximizes profit and the number of rooms rented at that price.

Demand: P=100- 2Q