# Jim Jones, a motel owner, noticed that just down the street the Motel 36 advertises a $36-per-night ## Question: Jim Jones, a motel owner, noticed that just down the street the "Motel 36" advertises a$36-per-night room rental rate on its sign. As a result, this competitor rents all 80 rooms every day by late afternoon. Jim, on the other hand, does not advertise his rate, which is $54 per night, and he averages only a 68% occupancy of his 50 rooms. There are a lot of other motels nearby, but only Motel 36 advertises its rate on its sign. (Rates at the other motels vary from$48 to $80 per night.) Jim estimates that his actual incremental cost per night for each room rented, rather than remaining vacant, is$12. This \$12 pays for all the cleaning, laundering, maintenance, utilities, and so on. Jim believes his eight alternatives are:

What should Jim do? Show how you reached your conclusion.

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## Engineering Economic Analysis

ISBN: 9780195168075

9th Edition

Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle

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