1. You own a franchise of rental car agencies in Florida. You recently read a report indicating that about 80 percent of all tourists visit Florida during the winter months in any given year, and that 60 percent of all tourists traveling to Florida by air rent automobiles. Travelers not planning ahead often have great difficulty finding rental cars due to high demand. However, during non-winter months tourism drops dramatically and travelers have no problem securing rental car reservations. Determine the optimal pricing strategy, and explain why it is the best pricing strategy.
2. According to some translations, Nobel Laureate Albert Einstein once said, “God does not play dice with the universe.” Does this mean that a profit-maximizing firm would never use something like dice or a roulette wheel to help shape its pricing decisions? Explain.