Answer all questionsPlease complete the following two appli
Answer all questionsPlease complete the following two applied problems:BUS640_Week_Five_Problem_2_Chart.bmpProblem 1:Jessica Alba, a famous actress, starts the baby and family productsbusiness, The Honest Company, with Christopher Gavigan. Alba and Gaviganset up their site so families can choose what kinds of non-toxic,all-natural products they’d like to use and get them in a bundle.Families can choose all kinds of products from food to hygienenecessities and cleaning supplies. Suppose they are thinking ofexpanding their business into five domestic markets: Phoenix, Dallas,Chicago, New York, and Atlanta. Assume their primary goal of business isto maximize economic profits, although they want to do businesshonestly.Show all your calculations and process. Describe your answer for each question in three- to five-complete sentences.You are a business adviser for Alba and Gavigan. Describe askimming price and a penetration price, and advise them whether theyshould charge a skimming price or a penetration price, with supportivereasoning for and against each pricing alternative.Are they likely to make economic profits initially? Can theycontinue to make economic profits in the long term? Why or why not?Discuss.What advice would you give to Alba and Gavigan to help them make more profit in the long term?Problem 2:You operate your own small building company and have decided to bid on agovernment contract to build a pedestrian walkway in a national parkduring the coming winter. The walkway is to be of standard governmentdesign and should involve no unexpected costs. Your present capacityutilization rate is moderate and allows sufficient scope to understandthis contract, if you win it. You calculate your incremental costs to be$268,000 and your fully allocated costs to be $440,000. Your usualpractice is to add between 60% and 80% to your incremental costs,depending on capacity utilization rate and other factors. You expectthree other firms to also bid on this contract, and you have assembledthe following competitor intelligence about those companies.Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.What price would you bid if you must win the project? What price would you bid if you want to maximize the expected value of the contribution from this contract? Defend your answers with discussion, making any assumptions youfeel are reasonable and/or are supported by the information provided.