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 Bookstore
Location: 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/month
2 for morning shift ( 9 a.m 3 p.m)
2 for night shift ( 3 p.m 9 p.m)

3 of us as the managers
Salary: 4,000,000 VND/month + the proportional
profit
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 foreign
publishers
Number of readers
II. Market
2. Factors affecting supply

Paper price
Printing technology
Number 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
Equilibrium
point
II. Market
4. Elasticity

E
d
= 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 tax
1,000,000 VND per year

2. Enterprise Income Tax
10% of the net income

IV. Costs
1. Opportunities costs
a. Explicit costs
Fixed cost:
o Rent expense: 5,000,000 VND
o Salary expense: 18,000,000 VND
o Depreciation expense: 100,000 VND
------------------------------------------------------------------
Fixed cost per month: 23,100,000 VND
Fixed cost per day: ~ 800,000 VND

Variable cost:
Utilities expense, cost of goods sold, enterprise
income tax

IV. Costs
1. Opportunities costs
b. 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 costs
a. Cost table
b. 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 Bookstores Different
Costs
Efficient
scale
Figure 02: TX Bookstores Average-Costs and Marginal-Cost
Curves
IV. Costs
3. Business decisions
a. P > ATC min profit > 0 continue the
business
b. P = ATC min profit = 0 continue the
business
c. P < ATC min profit < 0
In the long run, exit the market
In the short run:
o P > AVC min continue the business at
lower quantity sold.
o P < AVC min shut down the business