Optimal price and quantity given production constraint

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You work for a drug manufacturing company and holds a patent on Hair Grow, the worlds most famous effective drug for restoring hair. Your job is to analyze the pricing and investment decisions facing the firm. Your marketing group estimates that Hair Grown has the following demand: P=101 - .00002Q. 1. your marginal cost for producing a Hair Grow pill is $1. what is the profit maximizing price and quantity? what is your profit? 2. Suppose the production facility can only produce 1,000,000 pills. What is the optimal price and quantity given the production constraint? What are your profits? 3. Suppose that you could increase the capacity of your plant 3,000,000 pills within a 2 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)?

Reference no: EM131101474

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