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Just Cookbooks

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Submitted By chayden723
Words 1120
Pages 5
Crystal Hayden
ECON212-1502A-05
05/04/2015

JustCookbooks.com
In six months from now I am going to open an online cookbook business. After researching different costs my business could have; I came up with a few figures for my fixed costs and variable costs. My fixed costs include technology, equipment, and overhead. Overhead expenses include accounting fees, advertising, insurance, legal fees, rent, repairs, supplies, taxes, telephone bills, and utilities. Technology would include web design and maintenance. My variable costs include postage & handling, inventory of cookbooks and miscellaneous things that we may need for the business. I am giving myself five thousand dollars to spend on technology, four thousand dollars for equipment and one thousand dollars for overhead. That means my fixed costs equal ten thousand dollars. My variable costs are postage and handling one thousand dollars, miscellaneous at three thousand dollars, and inventory of cookbooks at two thousand dollars. The total cost of Justcookbooks.com would be variable costs plus fixed costs.
Total cost equals six thousand dollars plus ten thousand dollars, for a total of sixteen thousand dollars. To get the marginal cost you would divide the total cost; by the number of cookbooks expected to sell which is twenty two thousand; to get you a marginal cost of seventy three cents. The demand curve shows the relationship between quantities demanded at certain price levels. By plotting and analyzing the demand curve you can figure out if the business is elastic or inelastic. An elastic product demand changes a lot with each price level. Justcookbooks.com would be inelastic because if you look at the chart below the demand does not change that much with each price level. I used the equation Q = 40,000-500P. P stands for the price the cookbooks will be selling at. I started with twenty five

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