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Calculus I, II, III
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Your firm, which operates a nationwide system of cancer clinics, has annual profits of $800 million and cash reserves of $500 million. Your clinics have a replacement value of $200 million, and fire insurance for them would cost $5 million per year. Actuarial data show that your expected losses due to fire are $4 million. Should you buy insurance?
Elasticity and Pricing (40 points)Suppose the number of firms you compete with has recently increased. You estimated that as a result of the increased competition, the demand elasticity has increased from 2 to 3. You are currently charging $10 for your product. What is the price that you should charge if demand elasticity is -3?
In the Excel document, you will find the 2018 data for 17 cities in the data set Cost of Living. Included are the 2018 cost of living index. You use this information to run a Multiple Linear Regression to predict Cost of living, along with calculating various descriptive statistics.
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