Suppose the Cost of Operating a 100 Room Hotel for a Night

question 75

Multiple Choice

Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight.If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night,the hotel manager should

• A)rent the room because the marginal benefit exceeds the marginal cost.
• B)rent the room because the marginal benefit exceeds the average cost.
• C)not rent the room because the marginal benefit is less than the marginal cost.
• D)not rent the room because the marginal benefit is less than the average cost.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Financial Statements

The comprehensive reports that summarize a company's financial performance, position, and cash flows over a specific period.

Current Ratio

An assessment tool that determines an enterprise's capability to settle short-term due debts by dividing its immediate assets by its immediate liabilities.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial position.