Suppose that on a Saturday night at 10 pm, a large hotel has 300 vacant rooms, with little expectation of renting them at such a late hour on a weekend. A traveler comes in the door, looking a bit down on his luck, and asks how much a room will cost. Since he can’t afford the normal rate of $150, the night manager decides to let him stay in the room for only $40. Is it likely that this decision reduced, or increased, the hotel’s profits? Explain your answer.
What will be an ideal response?
Marginal analysis can help answer this question. The hotel’s marginal revenue in this case is $40; what is the marginal cost? It is the cost of cleaning the room and putting in clean towels and sheets after the traveler leaves. Since this is likely to be less than $40, this decision probably did increase the hotel’s profits.
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A) declines and unemployment declines. B) is unchanged but unemployment rises sharply. C) declines and unemployment rises. D) declines but unemployment typically does not change.
All of the following are examples of borrowings by a bank EXCEPT
A) federal funds. B) repurchase agreements. C) discount loans. D) commercial loans.
Which of the following would cause the demand for computer programmers to increase?
a. a decline in the productivity of computer programmers b. an increase in the productivity of computer programmers c. an increase in the wages of computer programmers due to legislative action (that is, the establishment of a price floor for computer programmers) d. a reduction in the price of a competitive input that can be substituted for computer programmers
Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.
Figure 9.2Refer to Figure 9.2. The firm's ________ point is at a price of $6.
A. shut down B. profit maximizing C. break even D. loss maximizing