Help w/ Question, Managerial Economics

Assignment Help:
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.

Related Discussions:- Help w/ Question

Why do monopolies exist, Why Do Monopolies Exist? Monopolists have mark...

Why Do Monopolies Exist? Monopolists have market power and as a consequence will charges higher prices and generate less output than a competitive industry. It produces profit

State about production theory, State about Production theory Production...

State about Production theory Production theory assists in determining the size of firm and level of production. It clarifies the relationship between marginal and average cost

Meaning of desire for a commodity, Desire for a commodity This validat...

Desire for a commodity This validates that a want or a desire doesn't develop into a demand except it is supported by the ability and willingness to acquire it. For example, a

Economics of population, The Economics of Population Population issues...

The Economics of Population Population issues became matters of economic concern when it became increasingly apparent that the problem of excess population may be a serious ob

Disadvantages of barter trade, Disadvantages of Barter Trade It is...

Disadvantages of Barter Trade It is impossible to barter unless A has what B wants, and A wants what B has. This is called double coincidence of wants and is difficult t

Short run equilibrium of a firm under monopoly, The short run equilibrium o...

The short run equilibrium of monopolist is displayed below in figure. Figure: Abnormal Profit under Monopoly AR is the average revenue curve, MR is marginal revenue cu

Elasticity of demand, a. Explain why the demand for a particular brand is m...

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

Central bank functions-lender of last resort, Lender of Last Resort The...

Lender of Last Resort The central bank also acts as the lender of last resort. Historically, this function developed out of the special position of the central banks. The centr

Consumption function, The Consumption Function The consumption functio...

The Consumption Function The consumption function is the relationship  [expressed in mathematical or diagrammatic form] between planned consumption and other independent varia

#Profit as a business Objective, Write on one theory of profit. Profit as r...

Write on one theory of profit. Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd