Microeconomic Project Presentation

8/11/2019 Microeconomic Project Presentation

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Group 1:•

Ha Thi Van Anh• Ngo Quynh Hoa• Truong Thi Tuyet



Content

I. Overview

II. Market

III. Taxes

IV. Costs



I. Overview

1. Basic background of the bookstore

Name: Thanh Xuan BookstoreLocation: roundabouts the area of HANU

Area: 25 m 2

Capital: 75,000,000 VND

Open hours: 9 am – 9 pm



Picture 01:The design of TX

Bookstore



I. Overview

2. Products

Main products: books (from domestic publishers)

Supplementary products:Magazines

Stationeries



I. Overview

3. Human resource

Hire 4 employees (students)

Salary: 1,500,000 VND/month2 for morning shift ( 9 a.m – 3 p.m)2 for night shift ( 3 p.m – 9 p.m)

3 of us as the managersSalary: 4,000,000 VND/month + the proportionalprofit



I. Overview

4. Target customers:

Students from high schools and universities

nearby



I. Overview

5. Competitors in the area

Quy Tai Bookshop

FAHASA the book supermarket



II. Market

1. Factors affecting demand

Aggregate real income

Price of e-books and books from foreignpublishersNumber of readers



II. Market

2. Factors affecting supply

Paper price

Printing technologyNumber of other bookshops in the area



III. Market

3. Equilibrium condition

Price/unit Quantity demanded Quantity supply

11,000 95 65

13,000 75 75

15,000 55 85

17,000 35 95

19,000 15 105

Table 01: Demand and supply schedule for books



Figure 01:

The equilibrium of supply and demand

Equilibriumpoint



II. Market

4. Elasticity

Ed = 1.4 > 1 demand for books market is elastic.

E s = 0.8 < 1 supply for books market is inelastic.

Our pricing strategy: reduce the price of books to

increase the total revenue



III. Taxes

1. Registration tax1,000,000 VND per year

2. Enterprise Income Tax10% of the net income



IV. Costs

1. Opportunities costsa. Explicit costs

Fixed cost:o Rent expense: 5,000,000 VNDo Salary expense: 18,000,000 VNDo Depreciation expense: 100,000 VND

------------------------------------------------------------------

Fixed cost per month: 23,100,000 VNDFixed cost per day: ~ 800,000 VND

Variable cost:

Utilities expense, cost of goods sold, enterpriseincome tax



IV. Costs

1. Opportunities costsb. Implicit costs

Cost of labor: 12 * 2,800,000 VND Cost of capital: 9,000,000 VND

------------------------------------------------------------- our total yearly implicit cost: 42,600,000 VND



IV. Costs

2. Various measures of costsa. Cost tableb. Cost curves



Quantity

of books

(100-pages

per day)

Total

Cost

Fixed

Cost

Variable

Cost

Average

Fixed

Cost

Average

Variable

Cost

Average

Total

Cost

Marginal

Cost

0 800 800 0 ----- ----- ----- 2,0

4,5

7,0

9,5

12,0

14,5

17,0

19,5

22,0

24,5

10 820 800 20 80,0 2,0 82,0

20 865 800 65 40,0 3,3 43,3

30 935 800 135 26,7 4,5 31,2 40 1030 800 230 20,0 5,8 25,8

50 1150 800 350 16,0 7,0 23,0

60 1295 800 495 13,3 8,3 21,6

70 1465 800 665 11,4 9,5 20,9

80 1660 800 860 10,0 10,8 20,8 90 1880 800 1080 8,9 12,0 20,9

100 2125 800 1325 8,0 13,3 21,3

Table 02: TX Bookstore’s DifferentCosts



Efficient

scale

Figure 02: TX Bookstore’s Average -Costs and Marginal-Cost

Curves



IV. Costs

3. Business decisionsa. P > ATC min profit > 0 continue the

business

b. P = ATC min profit = 0 continue thebusiness

c. P < ATC min profit < 0In the long run, exit the marketIn the short run:

o P > AVC min continue the business atlower quantity sold.

o P < AVC min shut down the business



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Microeconomic Project Presentation