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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Resulting 8 Alternative Occupancy Rate Advertise and Charge $35 per night 42 per night 48 per night 54 per night Do Not Advertise and Charge $48 per night 54 per nigl 62 per night 68 per night 100% 94 80 70% 68 56