Question 55 A vertically integrated firm has 2 divisions; upstream and downstream divisions. The upstream division produces chemical Y, whose average total cost is ATCU = 10 + 2QU, where Qu is the quantity of Y. The downstream division has its own average total cost of ATC = 20 + 3Q where Q is the quantity of the firm's final product. There is no external market. What is the transfer price (Pu)? Question 55 options: PU = 10 + 2QU. PU = 10 + 4QU. Pu = 20 + 3QU. PU = 20 + 6QU. %3D None of the above.

Question 55 A vertically integrated firm has 2 divisions; upstream and downstream divisions. The upstream division produces chemical Y, whose average total cost is ATCU = 10 + 2QU, where Qu is the quantity of Y. The downstream division has its own average total cost of ATC = 20 + 3Q where Q is the quantity of the firm's final product. There is no external market. What is the transfer price (Pu)? Question 55 options: PU = 10 + 2QU. PU = 10 + 4QU. Pu = 20 + 3QU. PU = 20 + 6QU. %3D None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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