Any shopping mall has so-shopping mallcalled common areas:hallways, food courts, kidsplay areas, and so on. A?shopping mall owner splitsthe total annuals expenses forthe common areamaintenance (CAM) betweenall tenants: anchor stores andin-line tenants. Because anchors bring a lot of customersinto the mall, it is customary to charge them a relatively lowCAM charge per square foot per year on top of their baserent. Calculate the CAM charge per square foot per yearthat the in-line tenants are required to pay on top of theirbase rents. What we know about our shopping mall:Total square feet: 1,000,000Common s.f.areasTotal CAM expenses per year:$5,000,000Total squareTotal square feet: 2,000,000s.f.footage of themall:Anchors Contribute $0.60 per s.f. peryear to the annual CAM5,000,000expensessquare feetTotal square feet: 2,000,000s.f.In-lineContribute $??????? per s.f.tenantsper year to the annual CAMexpenses$0.87$1.30$1.90$2.83$4.60$4.83

Landlords pass on the costs of standard area maintenance to their renters via CAM charges. These…

Answered: What we know about our shopping mall:…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 12CQ

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