Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight

Economics Dec 15, 2020

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. The marginal cost per room per night:

a) Is $40,

b) Is $80,

c) Is $120,

d) Cannot be determined from the information given.

Expert Solution

The correct answer to the given question is option d) Cannot be determined from the information given.

In the given scenario, one cannot determine the total fixed costs and total variable costs incurred for operating a 75 room hotel for a night at overall cost of $6,000. Hence, the marginal cost per room for the 5 empty rooms cannot be determined as the marginal cost is usually the variable cost per room in such scenario.

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