Shareholders: Pham T.T Duong Tran Thi Hanh

Nguyen T. Hong Linh

Pham T. Cam TuInstructor: Ms. Quyen

Yogurt 365

Table of contentOverview about business

Factors affecting demand & supply

Equilibrium & ElasticityTaxationFactors of productionDifferent costs of businessDecision making

Overview about business

Capital: 200 millions VND Main activities: serving yogurt & related

products Location: 165 Luong The Vinh , Tu Liem Area: 30m2 inside – 10m2 outside Opening-closing time: 7am - 9.30pm

(weekdays) 7am - 10.30pm (weekends)

Overview about business

Employees:1 business manager 2 shop servers 1 bartenderTarget customers: students &

householdsMain product: yogurt

Factors affecting Demand & supply

Demand:

Price of related goods Income, expectation No. of buyers

Factors affecting Demand &

supplySupply:

Inputs Competitors Technology Expectation

Quantity supplied & demanded

P(VND) Qs Qd Es Ed

11000 20 120 - -

12000 30 110 - -0.9

13000 40 100 4.0 -1.1

14000 50 90 3.25 -1.3

15000 60 80 2.8 -1.6

16000 70 70 2.5 -1.9

17000 80 60 2.3 -2.3

18000 90 50 2.13 -2.8

19000 100 40 2.00 -3.6

Equilibrium conditions

Conclusion At P = 16,000 VNDQuantity demanded =

Quantity supplied = 70Equilibrium point =

(70;16,000)Total revenue = 1,120,000

VND

Elasticity of products

P(VND) Qs Qd Es Ed

11000 20 120 - -

12000 30 110 - -0.9

13000 40 100 4.0 -1.1

14000 50 90 3.25 -1.3

15000 60 80 2.8 -1.6

16000 70 70 2.5 -1.9

17000 80 60 2.3 -2.3

18000 90 50 2.13 -2.8

19000 100 40 2.00 -3.6

Pricing strategies TR = P*Q E = % ∆Q * % ∆ P

P↑ → TR↑ → increase price of goods P↓ → TR↓ → not decrease price of goods

P↑ → TR↓ → not increase price of goods P↓ → TR↑ → decrease price of goods

Taxation

the income tax = 0

tax for business registration = 0

Excise tax = 1millions per year

Factors of products

Land: Rent 30m2 Rent expense = 4.5 millions

VND/month Labor: 4 employees (no salary expense) Capital: 200 millions VND (shareholders)

Different costs Implicit costs (Opportunities costs) Economic depreciation Normal profit

Explicit costs : Fixed cost Variable costs

Different costs Fixed costs: are the costs that do not vary

with the amount of output productions including:

Rent cost =4.5millons VND/month

Salary expense =0 Utility expense =1.5millions

VND/month

Different costs Variable cost: are the costs that

do vary with the amount of output productions

With 70 cups: total variable costs = 5,000 VND * 70 = 350,000 VND

Cost tableQuantity

(Q) FC VCTC

(FC+VC)AFC(FC/Q)

AVC(VC/Q)

ATC(TC/Q)

MC(∆TC/∆Q)

0 550,000 0 550,000        

10 550,000 20,000 570,000 55000 2000 57000 2000

20 550,000 35,000 585,000 27500 1750 29250 1500

30 550,000 46,000 596,000 18333 1533 19867 1100

40 550,000 70,000 620,000 13750 1750 15500 2400

50 550,000 103,570 653,570 11000 2071 13071 3357

60 550,000 178,570 728,570 9167 2976 12143 7500

70 550,000 300,000 850,000 7857 4286 12143 12143

80 550,000 510,000 1,060,000 6875 6375 13250 21000

90 550,000 850,000 1,400,000 6111 9444 15556 34000

100 550,0001,250,00

0 1,800,000 5500 12500 18000 40000

Typical cost curve

Decision making

ATC min = 12,143 VNDAVC min = 1,533 VNDP= 16,000 VND

Decision making

Short-run

1. If P>ATC min → profit → continue business

2. If AVC min< P < ATC min → loss but smaller than AFC → continue business

3. If P<AVC min → loss and greater than AFC → shut down

Long-run

1. If P>ATC min → profit → continue business

2. If P<ATC min → loss → exit business