8. Merck is considering launching a new drug called Laffolin. Merck has identified two possible demand scenarios: DEMAND LEVEL 1 million patients 2 million patients Merck also has the following information: Revenue Fixed costs to manufacture and sell Laffolin Variable costs to manufacture and sell Laffolin Maximum number of patients that Merck can handle PROBABILITY 30% 70% $140 per patient $70 million $80 per patient 3 million a. (*) How many patients must Merck have in order to break even? b. (**) How much money will Merck make if demand for Laffolin is 1 million patients? If demand is 2 million patients? c. (**) What is the expected value of making Laffolin? d. (**) Draw the decision tree for the Laffolin decision, showing the profits for each branch (Total revenues - total variable costs - total fixed costs) and all expected values. L

8. Merck is considering launching a new drug called Laffolin. Merck has identified two possible demand scenarios: a. (") How many patients must Merck have in order to break even? b. (") How much money will Merck make if demand for Laffolin is 1 million patients? If demand is 2 million patients? c. (") What is the expected value of making Laffolin? d. (*) Draw the decision tree for the Laffolin decision, showing the profits for each branch (Total revenues - total variable costs - total fixed costs) and all expected values