I have to assume I have decided to start your own Internet business to sell cookbooks online I have estimate that the annual cost of this business in the first year will be as follows:
Fixed explicit costs (annually):
- Technology (Web design and maintenance) $5,000
- Postage and handling $1,000
- Miscellaneous $5,000
- Equipment $4,000
- Overhead $1,000
TOTAL Explicit Fixed Costs (annual) $16,000
Fixed implicit costs (annually):
- Lost wages from job given up (annual) $50,000
Variable cost = $20 per book.
Assume that the equation for demand is Q = 40,000 - 500P, where
- Q = the number of cookbooks sold per year
- P = the retail price of books
I need to figure out if the chart just goes by $5 on the side but I don't know how to figure this out.
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