For a cruise liner deciding how to price its rooms,if the cost of overpricing is lower than the cost of underpricing,then the management of the cruise liner should
A)Price lower than what they expect would fill capacity
B)Price higher than what they expect would fill capacity
C)Price such that they would expect to just fill capacity
D)None of the above

Question

For a cruise liner deciding how to price its rooms,if the cost of overpricing is lower than the cost of underpricing,then the management of the cruise liner should​
A)​Price lower than what they expect would fill capacity
B)Price higher than what they expect would fill capacity
C)Price such that they would expect to just fill capacity
D)​None of the above

Quizplus · Accepted Answer

If the cost of overpricing (i.e. not filling all the rooms) is lower than the cost of underpricing (i.e. discounting the rooms and not earning as much revenue), it would be best to price higher than what is expected to fill capacity. This way, the cruise liner can maximize their revenue while balancing the risk of not filling all the rooms. Pricing lower than what is expected to fill capacity (choice A) may result in the cruise liner missing out on potential revenue, while pricing to just fill capacity (choice C) may not maximize revenue. Therefore, choice B is the best option in this scenario.

For a Cruise Liner Deciding How to Price Its Rooms,if