Scenario 15-11 Vincent Operates a Scenic Tour Business in Boston. He Has

question 173

Short Answer

Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-11. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

Comprehend the stages of a product's life cycle and the associated costs.

Recognize the importance of managing bottlenecks in the production process.

Grasp the principles of throughput accounting and its impact on profitability.

Acknowledge the role of continuous improvement and performance measurement in process enhancement.

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Definitions:

Physiological Equilibrium

The state of internal, physical, and chemical balance maintained by living systems.

Drive Reduction

A motivational theory that suggests behavior is motivated by the desire to reduce internal drives caused by unmet physiological needs, aiming to return to a state of homeostasis.

Incentive

A factor, often external, that motivates or encourages individuals to act or behave in a certain way.

Biological Motives

Biological motives are innate needs that regulate survival and reproduction, encompassing hunger, thirst, pain avoidance, and sexual desire.