Question 1 4 pts Suppose you want to manufacture a life-saving drugs to low income household in the United States. You can produce the drugs parts for $2.00 per unit with a fixed cost of $1,000,000 setting up a in Durham, NC. Alternatively, you can outsource the drugs to a supplier in Asia at $5.00 per unit cost. (Please review the break-even model in the 'Economic model 2' slide in module 1). 1. Specify the cost equation if you choose to produce the drugs in Durham plant.' (Use C for cost and Q for output when setting up the costs equation.) 2. Specify the cost equation if you outsource the drugs to Asia. 3. Solve for breakeven output or Q 4. At what production unit, you should setup a plant in Durham, NC. Question 2 2 pts The Vine Lid. sells pre-pack organic vegan meal. The analysis of market data for its vegan meal generates the following estimates of the parameters of a demand function. do =100 or the estimate of the intercept 1 = - 2 is the estimate of the coefficient of the price (in dollars) of each pre-packed meal or P an = 0.75 is the estimate of the coefficient of per capita disposable income (measured in thousands of dollars) or / ag =5 is the estimate of the coefficient of the price of related product (in dollars) or PR a4 = 5 is the estimate of coefficient of the Vine's advertising expenditures or A D=demand or quantity demanded for Vine's vegan meal per month Review the demand theory and steps outlined in the slide 'Economic model 3_demand model in module 1 and, then, specify the estimated demand equation. You must know the difference between equation 1 and equation 2 in the slide Economic model 3_demand model'. Question 3 2 pts Refer to the the Vine Ltd. specified estimated demand equation in previous problem. Suppose the values of the independent variables in the specified equation in previous problem are given as per capital disposable income (1) = $100, price of related product (in $) or PR=$5, and Vine's advertising expenditures or A=0. Substituting the values, I = $100, PR=$5, and A=0, into the correctly specified demand equation (D on the left side) in the previous problem, derive the simple demand equation and inverse demand as shown in Equations 3 and 4 in the slide Economic model 3_demand model'. Question 4 2 pts Refer to the the Vine Lid. specified estimated demand equation in previous problems. Please review equation 0 Now assume that Vine spends $10 on advertising (A), while I = 100 and PR = 5. Derive the new simple demand equation and inverse demand equation