Costs of building capacity are mostly fixed

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For products like parking lots and hotels, costs of building capacity are mostly fixed or sunk and firms in this industry typically face capacity constraints. Therefore,

a. if SRMR>SRMC at capacity, then the firms should price to fill capacity

b. if SRMR<SRMC at capacity, then the firms should price to fill capacity

c. if LRMR>LRMC at capacity, then the firms should price to fill capacity

d. if LRMR<LRMC at capacity, then the firms should price to fill capacity

Reference no: EM131173828

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