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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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