Reference no: EM133063215
You are the owner of a small guest lodge in the Rockies that caters to skiers in the winter and hikers in the summer. Your lodge has 12 double rooms. You must earn $600 per day to meet costs and remain open. You estimate the demand for rooms as follows:
Price per room: $100, $80, $60, $40, $20
D1: 11, 13, 15, 17, 19
D2: 9, 11, 13, 15, 17
D3: 3, 6, 9, 12, 15
D1 is the number of rooms demanded by skiers during the Christmas and March holidays.
D2 is the number of rooms demanded during the rest of the ski season.
D3 is the number of rooms demanded by hikers during the summer
Questions:
1. What rate should you charge for rooms? One rate or a variable rate? Use a demand and supply graph to figure it out.
2. How much revenue would you gross per day (rate 3 number of rooms)? Subtract your costs and determine your profit for one day in each season.
3. Can you afford to stay open all year round?
Answer all questions in extreme detail and do not skip any questions. Also, draw a detailed supply and demand graph. DO NOT PLAGARIZE!
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