1.4 Input Modeling in Drug DevelopmentCost of Drug DevelopmentRevenue6.EffectivenessMarket ShareRevenue per personNumber of People9.10CostTotal Revenue111213Total Profit14 A drug company is planning to invest in a new drug. The cost of research has a uniform distribution15 on $300,000 to $500,000. There is a 40% chance that the drug will not be effective, in which case16 there will be no sales. If the drug is effective, then the total market for the drug is 400,000 people.The company expects their share of the market to have a triangular distribution with minimum 5%,maximum 30%, and most likely 20% of the people. For each person who uses the new drug, the20 company expects to make $100 in sales during the first year. The drug company would like to knowthe distribution of profit they can expect from undertaking this investment.1718192122232425

Investment refers to the purchase of assets with the sole motive of generating income. Businesses…

Answered: A drug company is planning to invest in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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