1  Hotel A is an all-exclusive resort in Cancun

1 

This is the better idea for the Resort Hotel to charge price gor meals by without entry fee F

Explanation-----

# Option 1 -----

Hotel serving free unlimited meals with entry fee F

We will find Profit Maximising point as per MR-MC rule

At Equilibrium --- MR=MC

Finding MR-------

P= 7-Q

PQ=TR= 7Q-Q²

MR=7-2Q

MC=0

So,at Equilibrium-----

7-2Q=0

Q=7/2=3•5 meals

Putting this value in demand equation----

P=7-3•5=$3•5

As, meals are provided at zero price , the hotel must charge entry fee @ $3•5

Option 2---

Under this option, the resort wants to give free entry but charging price for meals, it is better idea because if the hotel charges price (as Calculated above)@3•5 $ ,it will maximise its profits and it need not to charge entry fee

Evaluating------

First option gives unlimited food to visiters ,so charging per person a mere $3•5 giving loss to hotel but charging price for meals with free entry will prevent serving unlimited free food.

2 

Answer : SRTC Short Run Total Cost - Total cost is the cost of production comprising variable cost, which depend on the quantity of goods produced and includes inputs like labour, raw material, fixed cost, which is independent of the quantity of goods produced and includes inputs that connot be varied in the short terrm.

SRMC Short Run Marginal Cost is defined as the change in the short run total cost (SRTC) for a very small change in output.

The formula is

SRMC = Change in SRTC / Change in output

SRTC = Q² - 2Q + 1

dSTRC/dQ = SRMC

SRMC = 2Q - 2  

put Q = 12 in the above equation

SRMC = 2*12 - 2

SRMC = 24 - 2 = 22

Option B is the correct answer.