refer to the following figure:
‪
The Hilton Hotel chain serves both business and vacation travelers. ‪ represent the demand and marginal revenue for business travelers, while ‪ are the demand and marginal revenue for vacation travelers.
-If marginal cost decreases to the point that total marginal revenue (MR_T is not shown in the figure) for Hilton at the profit-maximizing level of total output is $40, what price should the Hilton charge BUSINESS travelers?

Question

refer to the following figure:
‪

The Hilton Hotel chain serves both business and vacation travelers. ‪

represent the demand and marginal revenue for business travelers, while ‪

are the demand and marginal revenue for vacation travelers.
-If marginal cost decreases to the point that total marginal revenue (MR_T is not shown in the figure) for Hilton at the profit-maximizing level of total output is $40, what price should the Hilton charge BUSINESS travelers?

Quizplus · Accepted Answer

At the profit-maximizing level of output, the price charged should be equal to the marginal revenue, which is given as $40. However, since the question asks for the price to be charged to BUSINESS travelers, and typically business travelers are charged a higher price, the closest higher price option available is $100.

Refer to the Following Figure