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Posted: March 7th, 2020
Make a Business Report by Answering the Following Questions
Question description
1000-1500 wordsYou 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:
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Technology (Web design and maintenance)
$5,000
Postage and handling
$1,000
Miscellaneous
$3,000
Inventory of cookbooks
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$2,000
Equipment
$4,000
Overhead
$1,000Part 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
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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:
What is the elasticity of the demand for cookbooks bought this way?Is the business worth pursuing so far?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 market structure have you entered, and why?What can you do to guarantee success in this market?What pricing strategy might you use?
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