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What market structure have you entered, and why?

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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 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?

 

Paper#27557 | Written in 18-Jul-2015

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