Suppose the in & Out Motel Has Annual Fixed Costs

question 41

Multiple Choice

Suppose the In & Out Motel has annual fixed costs applicable to its rooms of $1.2 million for its 300- room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The percent of occupancy for the year needed to breakeven is:

• A) 25%
• B) 27.4%
• C) 100%
• D) 3.65%

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Definitions:

Urban Land

Urban land refers to land that is used or designated for use in cities or towns, and includes a range of uses from residential to commercial and industrial.

Long-Run Cost Function

A relationship that shows the lowest cost at which a firm can produce any given level of output in the long run, where all inputs are variable.

Marginal Cost Function

is a mathematical representation that shows how the cost of producing one additional unit of a good varies as the quantity of production changes.

Telecommunication Tax

Taxes that are applied specifically to telecommunication services provided to consumers, including telephone and internet services.