ECON212-1501A-04 : Principles of Microeconomics -company that will sell cookbooks online. Justcookbooks.com

Task List:
ECON212-1501A-04 : Principles of Microeconomics
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 for
price between $25 and $35.

Address the following questions:
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?
Is the business worth pursuing so far?
What market structure have you entered, and why?
What can you do to guarantee success in this
market?
What pricing strategy might you use?