Help w/ Question, Managerial Economics

You have opened your own word processing service. You have already
bought a special computer needed for word processing and paid $5,000
for it. However, due to the cost changes in the computer industry, the
current price of an equivalent machine is $2,500. You could sell any
used machine for 200 dollars – and no machine can be used for more
than one year. If you were not word processing, you could earn $20,000
per year at an alternative job. Assume that the interest rate is 10%.

You can also hire an assistant who can do everything that you would do
for $20,000 per year, and you would still continue to do word
processing. One person using one computer can produce 11,000 typed
pages per year, and the price per page for your service is $2.

Calculate the following three options:

You are considering three options:
(1) leave your business the way it is
(2) expand your business by hiring an assistant, or
(3) shut down all operations.

Based on the costs and revenues above, which should you do? Explain
and show any relevant calculations.
Posted Date: 8/27/2012 4:47:00 PM | Location : United States







Related Discussions:- Help w/ Question, Assignment Help, Ask Question on Help w/ Question, Get Answer, Expert's Help, Help w/ Question Discussions

Write discussion on Help w/ Question
Your posts are moderated
Related Questions
Q. Characteristics of perfect competition market? Following are the characteristics of perfect competition market:  • Large Number of Sellers andBuyers: As there are a lar

What is decreasing marginal cost? All additional lawn mowed generates less benefit than the earlier lawn à along with decreasing marginal benefit; every additional unit generat

Define scarcity and opportunity cost. Show how these concepts are useful in managerial decision making

Leading Economic Indicators The 11 key economic indicators that have been establish to lead business cycle turning points. Of the 11, four are basically used in business;

what is demand estimation

Increase in demand SS is the supply curve and D 1 D 1 the initial demand curve shifts to the right, to position D 2 D 2 .  P 1 is the initial equilibrium price and q 1

Inelastic Supply Supply is said to be price inelastic if changes in price bring about changes in quantity supplied in less proportion.  Thus, when price increases quantity sup

Q. Explain about Linear Isoquant? : In this case, isoquant would be straight lines as in Figure below. This type presumes perfect substitutability of factors of production. I


Theory of Capital and Investment:  Theory of Capital and Investment evinces the below significant issues:  Selection of a viable investment project Efficient allocatio