Internet business

Internet business

You are starting your own Internet business. You decide to form a company that will sell cookbooks online. 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.   

Using 1000-1500 words--   

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?   

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