You Estimate That The Annual Cost Of This Business Will Be A
You Estimate That The Annual Cost Of This Business Will Be As Follow
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. 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 = 10,000 – 9,000P, where Q is the number of cookbooks sold per month and P is the retail price of books. Show what the demand curve would look like if you sold the books between $25 and $35.
Paper For Above instruction
The task involves examining the demand curve for cookbooks priced between $25 and $35, based on the demand function Q = 10,000 – 9,000P. This demand function indicates the relationship between the price of the books (P) and the quantity sold per month (Q). To visualize the demand curve within the specified price range, we substitute P values from $25 to $35 into the demand equation and compute the corresponding Q for each price point.
First, let's evaluate the demand at a price of $25:
- P = $25
- Q = 10,000 - 9,000 * 25
- Q = 10,000 - 225,000 = -215,000
Since the resulting Q is negative, it indicates that at $25, the demand drops to zero or negative, which is not feasible. Therefore, the actual maximum price at which demand is positive can be calculated by solving for when Q equals zero:
0 = 10,000 – 9,000P
9,000P = 10,000
P = 10,000 / 9,000 ≈ $1.11
This means that according to the demand function, demand exists only at prices below approximately $1.11, which contradicts the initial range of $25 to $35. This discrepancy suggests that the demand model provided is not consistent with the specified price range, or that demand is effectively zero at prices above $1.11.
However, assuming the demand function was intended to model demand at lower prices, and considering the problem's focus on prices between $25 and $35, it becomes necessary to reexamine the demand equation or interpret it differently. Alternatively, this indicates that at prices between $25 and $35, no demand exists based on this particular model, implying the demand curve is vertical at zero within this range.
In conclusion, the demand equation Q = 10,000 – 9,000P shows that at prices above roughly $1.11, demand drops to zero, and therefore, selling books at prices between $25 and $35 would result in no sales. If the original demand function is accurate, the demand curve within the $25 to $35 price range would be a flat line at Q=0, indicating zero demand at those prices.
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