Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Regarding the motel going out of business in the long run, implicit cost would be one of the main factors to consider. As time goes

Regarding the motel going out of business in the long run, implicit cost would be one of the main factors to consider. As time goes on and more development happens on the land, the motel will eventually start losing revenue due to the fact of growing firms around the motel. Because of the completion, the price fluctuation might drive rent cost higher thus bottle necking the price distribution when considering other means to maintain the motel's integrity. The implicit cost would show that even the profitable hotel is continuing to make profit, it might not be making as much as it could based on the competing business around. For example, if there was a major chain hotel like Hilton or Hampton Inn built next to the motel, if the motel sticks to the same methods that made it currently profitable, it will eventually fail because the demand required to keep up with cost and accommodations of the other major hotel chains would show to be too much. Over time, the land cost such as taxes could eventually lead to the motel shutting down. Another example I think of is actually playing the game of Monopoly. If you buy the brown

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Business Today

Authors: Charles Hill

9th Edition

1259299201, 9781259299209

More Books

Students also viewed these Economics questions

Question

Engage everyone in the dialogue

Answered: 1 week ago