Jonathan is considering opening a shop for online baseball memorabilia. He has two options. He can build the web site himself and only pay for hosting. This would cost him $2,000/year. The average item for sale is $4.01. Average costs associated with each sale are $2.99. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.22/item, so he is planning on also increasing his prices by $0.46/item. The remaining costs stay the same. If Jonathan sells 700 items, which option does he prefer? O a. He prefers to build the site himself at Q=700.

Jonathan is considering opening a shop for online baseball memorabilia. He has two options. He can build the web site himself and only pay for hosting. This would cost him $2,000/year. The average item for sale is $4.01. Average costs associated with each sale are $2.99. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.22/item, so he is planning on also increasing his prices by $0.46/item. The remaining costs stay the same. If Jonathan sells 700 items, which option does he prefer? O a. He prefers to build the site himself at Q=700.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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