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Suppose anocean-front hotel rents rooms. In thewinter, demandis: P1=501Q1 with marginal revenueof: MR1=502Q1. However, in thesummer, demandis: P2=2601Q2 with marginal revenueof:: MR2=2602Q2. Furthermore, suppose thehotel's
Suppose anocean-front hotel rents rooms. In thewinter, demandis:
P1=501Q1
with marginal revenueof:
MR1=502Q1.
However, in thesummer, demandis:
P2=2601Q2
with marginal revenueof::
MR2=2602Q2.
Furthermore, suppose thehotel's marginal cost of providing rooms is MC=5+1Q, which is increasing in Q due to capacity constraints.
Suppose the hotel engages inpeak-load pricing. During thewinter, theprofit-maximizing price is $
nothing
and theprofit-maxizing quantity is
nothing
rooms.
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