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
WHAT ARE THE PRINCIPLES OF MANGERIAL ECONOMICS

Relevance of The Law of Diminishing Returns The law of diminishing returns is important in that it is seen to operate in practical situations where its conditions are fulfille

You have been provided with daily data starting in January 2009 on the main New Zealand stock market index, the NSX-50. Choose a suitable model for measuring volatility on the New

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

present a detailed discussion of the principles of managerial economics

with the of evidence comprehensively discuss the market structure in the south African mobile telecommunications industry

Problems of prices and Incomes policy i. Confrontation The imposition of the prices and incomes policy, voluntary or statutory, risks the possibility of confrontation w

Q. Describe the gift exchange model of reciprocity? George Akerlof (1982) develops a gift exchange model of reciprocity in that employers offer wages unrelated to variations in

Profit maximiZation is theoretically the most sound but practically unattainable objective of business finns. Do you agree this statement? If agree give

real GDP is increasingly criticized for its alleged failure to adequately measure the standard of living. To what extent do you think this criticism is valid?