New Hampshire Resort's Policy and Profit Maximization

Running head: ME W3 A 1
ME W3 A
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1ME W3 A
Introduction
Firms that focus on achieving the profit maximization objective try as much possible
to ensure that the overall total costs incurred during the production process are lower than
that total revenue obtained (Einstein, 2011). Therefore, they device numerous strategies to
ensure that the profit maximisation goal is attained
Why the policy of new Hampshire is or not consistent with profit maximization
(Samuelson and Marks, Problem # 10 p. 88.
From the economics point of view, the above strategy is not in line with the principle
of profit maximization (Fleetwood, 2014). Thus New Hampshire resort by charging less in
the summer season, it’s deprived from obtaining as much revenue as possible to cover the
costs of production and the same time fetch more profits for the organization. In this case,
when there is an increase in demand, the external facts available may call for an increase in
the price level being charged (Fleetwood, 2014). Further, if new Hampshire resort is running
at a rate of 85 percent occupancy from the former 75 percent, then the other resorts
surrounding it will be able to shut down operations or close to capacity (Fleetwood, 2014). If
not, higher prices will be charged on each and every service offered by the surrounding
resorts. Hence the above demand will be sufficient enough to trigger or support a point of a
relatively higher price (Einstein, 2011). Therefore the optimization curve will be run on a
number of price change test series to effectively come up with a new price (Mankiw and
Taylor, 2011).
Also, the resort would gain much more if undertakes research to find out clearly the
rate of occupancy of the other resorts operating within the same vicinity both in summer and
winter (Einstein, 2011). This will help in making prudent and rational choices and decisions
(Fleetwood, 2014). Where the exists a big variation in e prices being charged on the similar