The Price Elasticity of Demand for a Rental Home in Luxury

question 112

Multiple Choice

The price elasticity of demand for a rental home in Luxury Resorts in the summer is 1.40 and is 2.60 in the spring. If Luxury Resorts faces a constant marginal cost of $600 per home rental, what is the profit- maximizing off- peak load price to charge in the spring?

• A)$2,100
• B)$975
• C)$850
• D)$575

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Definitions:

Teaching

The act or profession of instructing students in a particular subject or skill, aimed at transferring knowledge or skills.

Marginal Decision Making

The process of evaluating the additional benefits and costs of a decision when considering a small change in production or consumption.

Value Meal

A meal or combination of food items offered at a fast-food restaurant for a lower price than if the items were purchased separately.

Medium Fries

Generally refers to a portion size of fried potatoes offered in fast food or restaurant settings, situated between small and large size options.