Scenario 15-10
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-10. What is Vincent's total revenue on a typical day?

Question

Scenario 15-10
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:  Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-10. What is Vincent's total revenue on a typical day?

Quizplus · Accepted Answer

Vincent can fill his 50-person bus as long as there is sufficient total demand for the day. From the demand schedule given, we know that he will have:

- 30 adult passengers x $18 per person = $540 
- 10 children passengers x $10 per person = $100 
- 10 senior passengers x $12 per person = $120

Total revenue for the day = $540 + $100 + $120 = $760
Total revenue for two tours = $760 x 2 = $1520 
Profit earned for two tours = $1520 - $450 = $1070

Therefore, Vincent's total revenue on a typical day is $2,170 (2 tours x $1,085 each).

Scenario 15-10 Vincent Operates a Scenic Tour Business in Boston. He Has