Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight.If the marginal cost of operating one room for one night is $40,the hotel manager should rent one of the empty rooms only if a customer is willing to pay
A)more than $40,as the average benefit will exceed the marginal cost.
B)more than $40,as the marginal benefit will exceed the marginal cost.
C)more than $80,as the average benefit will exceed the marginal cost.
D)more than $80,as the marginal benefit will exceed the marginal cost.

Question

Quizplus · Accepted Answer

The hotel manager should rent one of the empty rooms if the marginal benefit (additional revenue from renting the room) exceeds the marginal cost ($40). Therefore, the customer should be willing to pay more than $40.

Suppose the Cost of Operating a 75 Room Hotel for a Night