Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"

please solve the problems

please solve the problems.

I’m trying to learn for my Economics class and I’m stuck. Can you help?

Problem Set #2

1. Prescott Pharmaceuticals makes a number of generic versions of drugs. When Cymbalta (Duloxetine) lost its patent, Prescott invested $500,000 to obtain FDA approval and $100,000 to certify one of its production lines for its production. Production of the drug will cost $2,000,000. Marginal costs for the tablet are $0.10 and they sell for $0.40 per tablet. But many firms have entered and now make Duloxetine causing sales to fall off. Prescott anticipates that it could use this production line for other drugs losing patent protection shortly. If forecasted sales are 5 million tablets, what is the breakeven price? Should Prescott discontinue selling this product?

2. When ShorTech introduced its Quadrant mobile phone, it had few competitors and so it set a price of $500 when its unit cost was $350. The economics consulting firm it hired to estimate the demand elasticity confirmed this was the optimal price. Since then, entry has occurred that make customers more price conscious. When it rehired the economics consulting firm to estimate the demand elasticity, it found that demand had become more elastic at -4. Also, it eked out cost savings and now has a unit cost of $300. What price should ShorTech charge now?

please solve the problems