Author Question: What is the average cost per unit for producing 3 units? a. 200. b. 260. c. 70. d. ... (Read 99 times)

ss2343 · **on:** Jul 1, 2018

What is the average cost per unit for producing 3 units?
a. 200.
b. 260.
c. 70.
d. 110.

Question 2

Cover Charges Hank's Honkytonk is a local bar and nightspot. On weekends, it requires a 5 cover charge to defray the costs of the live musical acts Hank brings in. This has worked wonderfully, as it generates capacity crowds and a long line of people waiting to enter. However, after the cost of the acts, he still loses money on the weekends. What is his marginal revenue and marginal cost of a patron on weekends and how should he attempt to fix his unprofitability problem?

leahchrapun · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

b

Answer to Question 2

Hank is not engaging in yield management effectively. Once his club as at capacity, the marginal cost of another patron jumps up as he could get shut down by the fire marshal. In this case, he should set price so as to fill capacity. If he increased his cover charge he would discourage some patrons. He could increase it until the line forming outside decreases into just a few people.