A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain.

A

Price maximization entails determining both the price and output levels to gain maximum gains. Several approaches can be used to maximize profits. First, the latter can be attained by increasing the prices of goods and services. It is important to evaluate and note the difference between marginal revenue and marginal cost. The maximum profit is usually realized when the marginal revenue exceeds the marginal cost. In the given scenario, the New Hampshire Resort incurs almost an equal cost in preparing both summer and winter activities. Hence, it is anticipated that the turnout in both seasons must be relatively the same in generating revenue that meets the costs incurred besides the generation of surplus income.

However, the turnout for summer is higher than in winter. In this case, the costs incurred to cater to the 15% deficit must be catered for by those people who turned up for winter activities. Since the operating costs are equal and yet in winter there are fewer people, then the best option to maximize profit is to escalate the night rates. For the Resort to be profitable during the winter season, the management should ensure that the difference between operational costs and revenue obtained reaches its maximum. In other words, people who attend the winter activities will have to share the deficit accordingly to meet the cost and anticipated profit margin. This will be the best option for enhancing economic efficiency at the Resort. Therefore, it is agreeable that the policy is consistent with the ideals of profit maximization.

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Academic.Tips. (2020) 'A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain'. 29 April.

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Academic.Tips. (2020, April 29). A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain. Retrieved from https://academic.tips/question/new-hampshire-resort/

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Academic.Tips. 2020. "A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain." April 29, 2020. https://academic.tips/question/new-hampshire-resort/.

1. Academic.Tips. "A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain." April 29, 2020. https://academic.tips/question/new-hampshire-resort/.


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Academic.Tips. "A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain." April 29, 2020. https://academic.tips/question/new-hampshire-resort/.

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"A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain." Academic.Tips, 29 Apr. 2020, academic.tips/question/new-hampshire-resort/.

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