Suppose You Are Managing a 100 Room Hotel That Has

question 197

Multiple Choice

Suppose you are managing a 100 room hotel that has 5 empty rooms for tonight. The cost of operating your 100 room hotel for a night is $10,000 and the average cost is $100 per room. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $50 for the night, you 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.