Use the Table Below to Answer the Following Questions) -Calculate the Market Share Percentage in the Third Year

question 19

Multiple Choice

Use the table below to answer the following questions) .
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to
$145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly
prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $$\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit monthly Rx) revenue \$) } & 420 \\\hline \text { Unit monthly Rx) cast \$) } & 150 \\\hline \text { Discount Rate per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D \$) } & 875,000,000 \\\hline \text { Clinical Trials \$) } & 145,000,000 \\\hline & \\\hline\end{array}$$
-Calculate the market share percentage in the third year.

• A) 25 percent
• B) 4 percent
• C) 11 percent
• D) 7 percent

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Definitions:

Sequential Game

A type of game in game theory where players make decisions one after another, rather than simultaneously, allowing for a strategic consideration of the previous actions.

Battle of the Sexes

A game theory model illustrating coordination problems through the preferences of two individuals trying to agree on a common decision with conflicting interests.

Maximin Strategies

Decision-making strategies aimed at maximizing the minimum payoff attainable, commonly used in games and economic scenarios where uncertainty is a significant factor.

Repetition of a Game

In game theory, it refers to playing the same strategic game multiple times, which can impact the strategies and outcomes over time.