For a parking garage of fixed capacity,the owner sets different parking rates for cars that are parked for less than 24 hours (short-term)and for those that are parked for more than 24 hours (long-term).To maximize revenue,the operator should set prices and target the number of places for each segment such that:
A)the marginal revenues from the segments are equal.
B)the total revenues from each of the segments are equal.
C)the short-term consumers pay a higher hourly price.
D)the long-term consumers pay a higher hourly price.
E)the price paid by both short-term and long-term consumers is equal.

Question

Quizplus · Accepted Answer

Maximizing revenue requires setting prices and capacity such that the marginal revenue from each segment is equal. This means that the revenue generated from the last space sold in each segment should be the same. If prices are too high for short-term parking, customers may choose to park elsewhere, while if prices are too low for long-term parking, the garage may be full of long-term parkers, leaving fewer spaces for short-term parkers who may pay a higher rate. Therefore, setting prices and capacity to ensure marginal revenue equality is the best option for maximizing revenue.

For a Parking Garage of Fixed Capacity,the Owner Sets Different