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:

Systematic Manner

A methodical and organized approach to tasks or problem-solving, characterized by order and consistency.

Cost-Leadership Strategy

A business approach aimed at becoming the lowest-cost producer in its industry.

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over competing ones due to satisfaction, trust, or emotional connection.

Advertisement Costs

The expenses incurred in promoting a product, service, or brand through various media channels like TV, radio, online, and print.