The table above summarizes Gorgeous Sands Resort's marginal capacity cost, marginal operating cost, peak marginal revenue, off- peak marginal revenue, and its peak and off- peak demand for its resort units.
-Refer to the table above. What is the profit- maximizing price for Gorgeous Sands Resort to charge during the off- peak period?
A)$2,500
B)$1,250
C)$1,750
D)$2,000

Question

The table above summarizes Gorgeous Sands Resort's marginal capacity cost, marginal operating cost, peak marginal revenue, off- peak marginal revenue, and its peak and off- peak demand for its resort units.
-Refer to the table above. What is the profit- maximizing price for Gorgeous Sands Resort to charge during the off- peak period?
A)$2,500 
B)$1,250 
C)$1,750 
D)$2,000

Quizplus · Accepted Answer

Profit-maximizing price is where marginal revenue equals marginal cost. 
During off-peak period, marginal cost is $1,000 and marginal revenue is $1,750, therefore the profit-maximizing price would be $1,750.

The Table Above Summarizes Gorgeous Sands Resort's Marginal Capacity Cost