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Principles of Micronomics

Question # 00000361
Subject: Economics
Due on: 08/08/2013
Posted On: 08/08/2013 08:20 AM

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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

Overhead

$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 = 40,000 – 500P, 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.

Address the following questions:

  1. What is the elasticity of the demand for cookbooks bought this way?
  2. Is the business worth pursuing so far?
  3. Suppose that you expect to sell about 22,000 cookbooks per month online, and assume your overhead, technology, and equipment costs are fixed. What are your total costs?
  4. What are your marginal costs?
  5. What market structure have you entered, and why?
  6. What can you do to guarantee success in this market?
  7. What pricing strategy might you use?

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Justcookbooks

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Posted On: 08/08/2013 11:24 AM
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Tutorial Preview …certain xxxxx factors xxxxxxxx technology which xxxxxx to the xxxxxxx maintained xx xxxx and xxxx individuals use xxx website to xxxxxxxxx the xxxxxxx xxxxxxx slower xxxxx the server xxx no longer xxxxxx the xxxxx xxxxxx of xxxxxxx flowing to xx Moreover since xxx servers xxxxxxxxxxxx xxx fixed xx the short xxxx larger volumes xxx cause xxx xxxxxxx to xxxxx often This xxxxx dissuade prospective xxxxxx who xxxxx xxx site xxx hence lower xxx sales In xxx longer xxxx xxxxxxxx we xxx increase the xxxxx factors like xxx number xx xxxxxxx we xxxx which can xxxxxxxx the capacity xx the xxxxxxx xx handle xxx traffic flowing xx it Also, xx will xxxx xxx up x larger place xxx the business, xx the xxxxx xxxxxx an xxxxxx where such xxxxxxx can be xxxxxx This xxxxx xx turn xxxxx the costs xx having to xxxxx the xxxxxxxxxx xxxxxx of xxxxxxx overtime (like xxx Google or xxxxxxxx expanded xxxxxxxxx xxxx is xxx of the xxxxxxxxxx of operating xx a xxxxxx xxxxx and xxxxxx the average xxxx of production xxxx is xxxxxxx xx economies xx scale from xxxxxxxxxx Moreover, as xxx time xxxxxx xxxxxxxxxx there xxxx be larger xxx better improvements xx technology xxxxx xx turn xxx help make xxx website more xxxxxxxxx and xxxxxxxxxx xxxx can xxxxxxxx sales as xxxx as reduce xxx transactions xxxxx xxxx in xxx longer run, xx can expand xxx website xxxx xxxxx domains, xxxx textbooks, literature xxx and thus xxxxxx and xxxxxxx x franchise xxx online market xxx book Given xxx increasing xxxxxxxxxxx xxxxxxxxx gained xxxx time…
Attachments
Justcookbook.doc (98 KB)
Preview: are xxxxx Hence xxx marginal costs xxxxxxx the cost xx maintaining xxxxxxxxxxx xxxx time xxx postage and xxxxxxxx charges These xxxxx increase xx xxx number xx books kept xx inventory increases x What xxx xxx implications xx operating in xxx short run xxx the xxxx xxx In xxx short run, xx is worthwhile xx operate xx xxx market xxxxx the business xx earning positive xxxxxxx However xx xxx longer xxxx new firms xxxx enter the xxxxxx which xxx xxxx up xxxxxx portals for xxxxxxxxx Such new xxxxx keep xxxxxxxx xxx market, xxxxxxxx close but xxx perfectly substitutable xxxxxxxx against xx xxxxxxx Such xxxxx keep coming xx in the xxxx run xxx xxxx reduce xxx demand faced xx me This xx turn xxxxxxx xx profits xxxxx I have x smaller market xx serve xxxxxxx xxx market xxxxxxx its long xxx equilibrium when xxxxx sufficient xxxxxx xx firms xx the market xxxx that each xxxxx including xxxxx xxx earning xxxx profits, i x PAC in xxx long xxx xxxx though x am earning xxxx profits in xxx long xxxx x still xxxxxxx a rate xx return from xxx website xxxxx xxxxxx my xxxxxxxxxxx cost of xxx full time xxx forgone xxxxx x will xxxxxxxx with the xxxxxxxx since it xxxxxx a xxxxxx xxxxx is xx least as xxxx as my xxxx best xxxxxxxxxxx x As xxxx business grows, xxx must you xxxxxxxx the xxxxxx xxxxxxxxx diminishing xxxxxxxx returns and xxxxxxxxx of scale xx the xxxxx xxxx.....
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Just cook book Part I and II original

Tutorial # 00000313
Posted On: 08/08/2013 06:36 PM
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Tutorial Preview …book xxxx…
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Justcookbook_final.doc (105 KB)
Preview: profit xxxxxxxxxxx (AR-AC)Q xxxx ARAC, it xx worth to xxxxxx the xxxxxxxx xxxxxxx it xxxxx that business xx making profit x Suppose xxxx xxx expect xx sell about xxxxxx cookbooks per xxxxx online, xxx xxxxxx your xxxxxxxxx technology, and xxxxxxxxx costs are xxxxx What xxx xxxx total xxxxx What are xxxx marginal costs xxxxx costs xxxxxxxxxx xxxx design xxx maintenance) Postage xxx handling Miscellaneous xxxxxxxxx of xxxxxxxxx xxxxxxxxx Overhead xxxxxxxxxxx cost of xxx forgone 50001000300020004000100012500 xxxxx It xx xxxxxxxx that xxxxxxxxxxx overhead and xxxxxxxxx costs are xxxxx Marginal xxxx xxxx be xxx total of xxx cost of xxxxxxxxxxx inventories xxxx xxxx and xxxxxxx and handling xxxxxxx Marginal cost xxxxxxxxx with xxx xxxxxxxx in xxx number of xxxxx kept in xxx inventory x xxxx are xxx implications of xxxxxxxxx in the xxxxx run xxx xxx long xxx When business xxxxx profit is xx worthy xx xxxxxxx the xxxxxxxx in the xxxxx run But xx the xxxx xxxx new xxxxx enter the xxxxxx and they xxxx open xxxx xxxxxx portals xxx cook books xxxxxxxx of new xxxxx is x xxxxxxxxxx process xx the long xxx and it xxxxxxxx offering xxxxx xxxxxxxx to xxx website These xxxxx reduced the xxxxxx of xxxxxxxxx xxxx by xx and also xxxxxxx my profit xx great xxxxxx xxxxxxx I xxxx smaller market xx operate in xxxxx is xxxx xxx equilibrium xx the market xxxx the market xxx adequate xxxxxx xx firms xxxxxxxxx.....
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