Share
Explore BrainMass

Seasonal Prices of a Resort

A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather related 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 summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit maximization? Explain.

Solution Preview

Yes. It can be consistent with profit maximization because we are talking about two different products that each have their own demand curves. If you look at the attached graph, you will ...

$2.19