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# Justcookbooks.com

Question # 00000266
Subject: Economics
Due on: 08/03/2013
Posted On: 07/30/2013 04:27 PM

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Question
You are starting your own Internet business. You decide to form a company that will sell cookbooks online. Justcookbooks.com is scheduled to launch 6 months from today. You estimate that the annual cost of this business will be as follows:

Technology (Web design and maintenance)
\$5,000

Postage and handling
\$1,000

Miscellaneous
\$3,000

Inventory of cookbooks
\$2,000

Equipment
\$4,000

\$1,000

Part I

Deliverable Length: 1 graph plus calculations

You must give up your full-time job, which paid \$50,000 per year, and you worked part-time for half of the year.

The average retail price of the cookbooks will be \$30, and their average cost will be \$20.

Assume that the equation for demand is Q = 10,000 – 9,000P, where

Q = the number of cookbooks sold per month

P = the retail price of books.

Show what the demand curve would look like if you sold the books between \$25 and \$35.

Part II

Deliverable Length: 1,000–1,500 words

1. What is the elasticity of the demand for cookbooks bought this way?
2. Is the business worth pursuing so far?
3. Why or why not?
4. Suppose that you expect to sell about 22,000 cookbooks per month online, and assume your overhead, technology, and equipment costs are fixed.
5. What are your total costs?
6. What are your marginal costs?
7. What are the implications of operating in the short run and the long run?
8. As your business grows, how must you consider the issues regarding diminishing marginal returns and economies of scale?
9. What market structure have you entered, and why?
10. What can you do to guarantee success in this market?
11. Can you use price discrimination in this business?
12. What pricing strategy might you use?

Objective: Describe and apply the economic perspectives of scarcity and opportunity costs.
Demonstrate skills in using the tools of economics for decision making for the firm operating in the market economy to include supply and demand, elasticity of demand, consumer behavior and utility maximization, and the costs of production both short-run and long-run.
Explain and cite examples of the various forms of market structure; pure competition, monopolistic competition, oligopoly, and monopoly.
Analyze current news events and apply basic economic concepts to everyday problems and situations.
Demonstrate the ability to clearly present views in written and/or oral expression.

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Min Words: 1000
Max Words: 1500

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#### Justcookbooks

Tutorial # 00000171
Posted On: 07/30/2013 04:29 PM
Posted By:
truetutor
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Tutorial Preview …month xxxx P=\$35, x =10000 – xxxxxxx = 10000-3150 xxxxx cookbooks xxx xxxxx P x 0 10000 x 5 9775 x 9550 x x 9325 xx 9100 12 x 8875 15 xxxx 17 x xxxx 20 xxxx 22 5 xxxx 25 7750 xx 5 xxxx xx 7300 xx 5 7075 xx 6850 37 x 6625 xx xxxx 42 x 6175 45 xxxx 47 5 xxxx 50 xxxx xx 5 xxxx 55 5050 xx 5 4825 xx 4600 xx x 4375 xx 4150 67 x 3925 70 xxxx 72 x xxxx 75 xxxx 77 5 xxxx 80 2800 xx 5…
Attachments
justcook.doc (99.5 KB)
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