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

Expected utility, (Only for extra credit) Consider Freddy on a rainy Thursd...

(Only for extra credit) Consider Freddy on a rainy Thursday afternoon after losing in his favorite video game. His friend Tommy comes over to cheer him up and offers him the follow

Gains from international trade, Gains From International Trade The gai...

Gains From International Trade The gains from International trade are to make the participating countries better of than they would have otherwise been.   This will be the res

Recession, Causes of the Nigeria recession

Causes of the Nigeria recession

Weapons of conflict, Weapons of Conflict The trade unions and the empl...

Weapons of Conflict The trade unions and the employers (or their associations) have many ways of enforcing their demands on each other.   They include: Strikes:  The stri

Progressive tax, PROGRESSIVE TAX A progressive income tax system is on...

PROGRESSIVE TAX A progressive income tax system is one where the higher the income, the greater the proportion paid in taxes.  This is effected by dividing the taxpayers' inco

Draw demand schedule and demand curve, The war on drugs is an expensive bat...

The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housi

Drafting of price policy, Drafting of Price Policy: Demand forecasts assis...

Drafting of Price Policy: Demand forecasts assist the management to prepare a few appropriate pricing systems, so that level of price doesn't fall and rise to a great extent at th

The spendthrift economy, The Spendthrift Economy This assumes a circul...

The Spendthrift Economy This assumes a circular flow of income in a closed economy with no Government sector and no foreign trade.   It also assumes the existence of two sect

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