Steven G. ECO/GM 561
July 7, 2011
Reynaldo S. Vanta
Will Bury Goes Global
Will Bury is an inventor who is convinced that soon all people will soon give up reading in favor of listening to digital versions of printed books. To meet this demand, Will Bury has invented a process to convert printed books into an audio digital version of the book. His inventory will include both older books in the public domain as well as newer copyrighted books for an extra $5 royalty fee. With limited resources, Will has limited his sales to the domestic United States market. Not understanding why, Will has discovered that the newer, more expensive titles sell better than the older less expensive title. Will desires to expand his business internationally but needs to understand why the demand is weighted toward the more expensive titles.
The main economic concept Mr. Bury needs to understand is supply and demand. Although he has a strong belief in his product, he has done no research as to what the actual demand for his product would or what price consumers would be willing to pay for the product. Without this, he has no idea how much to produce, which titles to produce, or how much to charge for each title. He is currently operating on trial and error and hoping the business will succeed.
Another concept Will needs to understand is that of substitution. Will his digitized books be a suitable substitution for audio books currently on the market? Can he produce them at a cost that would give them a competitive advantage over other similar products? Complementary goods are another concept for consideration. If the price of MP3 players or CD players goes up or down, how will this affect the sale of his product? (Also with computer technology increasing, how easy will it be to produce unauthorized copies of the books once they have been downloaded?)
Will also needs to understand the opportunity cost of missed time from... [continues]
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