Ceramic customs corp. required a specific type of ceramic to make its tiles. since there was only one supplier for that particular ceramic, the firm was forced to source all of its supplies from it. the firm tried negotiating the price of the material but failed to get any reduction on the cost. this was because:

Suppose a holiday inn hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. it operates 365 days per year. the amount of operating income on rooms, assuming an occupancy* rate of 80% for the year, that will be generated for the entire year is *occupancy = % of rooms rented