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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...

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.


Part 1:

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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