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Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
Edition 6ISBN: 978-0073523149Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
Edition 6ISBN: 978-0073523149 Exercise 9
ANALYZING MANAGERIAL DECISIONS: Pricing and Investment Decisions
You work for a drug manufacturing company that holds a patent on Hair Grow, the world's most effective drug for restoring hair. Your job is to analyze the pricing and investment decisions facing the firm. Your marketing group estimates that Hair Grow has the following demand curve:
P = 101 -.00002 Q
Suppose that you could increase the capacity of your plant to 3,000,000 pills within a two-year period for a cost of $30,000,000. Should you undertake the investment (for simplicity, assume you can borrow the funds for the expansion at a 0 percent interest rate)
You work for a drug manufacturing company that holds a patent on Hair Grow, the world's most effective drug for restoring hair. Your job is to analyze the pricing and investment decisions facing the firm. Your marketing group estimates that Hair Grow has the following demand curve:
P = 101 -.00002 Q
Suppose that you could increase the capacity of your plant to 3,000,000 pills within a two-year period for a cost of $30,000,000. Should you undertake the investment (for simplicity, assume you can borrow the funds for the expansion at a 0 percent interest rate)
Explanation
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Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
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