An otherwise unprofitable motel located on a largely abandoned roadway might be able to stay open for several years by
A)increasing its nightly room rates.
B)reducing or eliminating its annual maintenance expenses.
C)charging room rates that exceed marginal revenue.
D)eliminating its fixed costs, including its opportunity costs.

Question

Quizplus · Accepted Answer

Reducing or eliminating annual maintenance expenses can lower the overall operating costs of the motel, potentially allowing it to remain open despite low revenue from an abandoned roadway location. Other options would likely not be sustainable or are not feasible (e.g., eliminating fixed costs entirely or charging rates above marginal revenue might not attract enough customers).

An Otherwise Unprofitable Motel Located on a Largely Abandoned Roadway