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Question # 00000089
Subject: Economics
Due on: 07/19/2013
Posted On: 07/18/2013 03:35 PM

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You are starting your own Internet business. You decide to form a company that will sell cookbooks online. 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)
Postage and handling
Inventory of cookbooks
Part I 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
Address the following questions:
What is the elasticity of the demand for cookbooks bought this way?
Is the business worth pursuing so far?
Why or why not?
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?
What are your marginal costs?
What are the implications of operating in the short run and the long run?
As your business grows, how must you consider the issues regarding diminishing marginal returns and economies of scale?
What market structure have you entered, and why?
What can you do to guarantee success in this market?
Can you use price discrimination in this business?
What pricing strategy might you use?
Tutorials for this Question
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Justcookbooks part I and II

Tutorial # 00000033
Posted On: 07/18/2013 04:26 PM
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Tutorial Preview …substitutable xxxxxxxx against xx website Such xxxxx keep coming xx in xxx xxxx run xxx they reduce xxx demand faced xx me xxxx xx turn xxxxxxx my profits xxxxx I have x smaller xxxxxx xx serve xxxxxxx the market xxxxxxx its long xxx equilibrium xxxx xxxxx sufficient xxxxxx of firms xx the market xxxx that xxxx xxxxx including xxxxx are earning xxxx profits, i x P=AC xx xxx long xxx Even though x am earning xxxx profits xx xxx long xxxx I still xxxxxxx a rate xx return xxxx xxx website xxxxx covers my xxxxxxxxxxx cost of xxx full xxxx xxx forgone xxxxx I will xxxxxxxx with the xxxxxxxx since xx xxxxxx a xxxxxx which is xx least as xxxx as xx xxxx best xxxxxxxxxxx 5 As xxxx business grows, xxx must xxx xxxxxxxx the xxxxxx regarding diminishing xxxxxxxx returns and xxxxxxxxx of xxxxxx xx the xxxxx run, the xxxxxxxxxx and equipments xxx fixed xxxxxxx xx the xxxxxx run, as xxxx and more xxxxxxxxx are xxxxx xxxxx will xxxxxxxxxxx returns to xxxxxx (i e xxx labor xxxxxx xxx in) xx you end xxxxxxx less and xxxx cookbooks xxxxx xxxxx are xxxxxxx fixed factors xxxxxxxx technology which xxxxxx to xxx xxxxxxx maintained xx more and xxxx individuals use xxx website xx xxxxxxxxx the xxxxxxx becomes slower xxxxx the server xxx no xxxxxx xxxxxx the xxxxx volume of xxxxxxx flowing to xx Moreover xxxxx xxx servers xxxxxxxxxxxx are fixed xx the short xxxx larger xxxxxxx xxx cause xxx website to xxxxx often This xxxxx dissuade xxxxxxxxxxx xxxxxx who xxxxx the site xxx…
just_cook_book.doc (98 KB)
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