Answer: to maximize profit the management must continue charging $40 per room because it will obtain a profit of $1,920 better than $1,870 if it rises the rate.
Step-by-step explanation:
<u>Profit without the increase</u>
60 (number of rooms) * $40 (rate per room) = $ 2,400
costs of day to service = 60 (rooms) * $8 (costs day to service)= $480
Total Profit = $2,400 - $480 = $1,920
<u>Profit with the increase</u>
55 (5 fewer than before) * 42 (rate with the increase) = $ 2,310
costs of day service 55 (rooms) * 8 ( costs day to service) = $440
Total Profit = $2,310 -$440 = $1,870
