1. Individual Problems 22-1 Suppose that a paper mill "Feeds" a downstream box mill. For the downstream mill. the marginal profitability of producing boxes decline '.-.'ith volume. For example, the rst unit of boxes increases earnings by 5.20r the second by SIB. the third by 515. and so onr until the tenth unit increases prot by just 52. The cost the upstream mi|| incurs for producing enough paper [one \"unit" oF paper] to make one unit of boxes is 510.50. Assume the two mi||s operate as separate prot centers. and the paper mill sets the price of paper. It follo'.-.'s that the marginal profitability of boxes represents the highest price that the box division '.-.'ould be '.-.'il ling to pay' the paper division for boxes\" Furthermore, assume that fixed costs are 50 For the paper mill. The following table summarizes the quantity. ootal revenuer and marginal costs from the perspective of the paper mill for selling paper no the box mill at various prices. In the fo.'J'owr'ng tabl'e, f.' in the marginal revenue, rota! cost, and total profit for the paper mJ'.'J' when seJ'.'J'ng paper to the hex rm'.'J' at each given price. Total Ha rginal Price Quantity Revenue Marginal Ieuenue Total Cast Cast Protit {Marginal Protita ' {Units of Pa per the Box MIII) equivalent to {5} One Box} {5} {5} {5) 520 1 520 510.50 5 $10.50 $13 2 535 s 510.50 515 3 543 3 $10.50 $14 4 :55 3 5 510.50 512 5 560 S $10.50 $10 5 sad _- s 510.50 53 7 555 S E 510.50 $6 s 548 s ' 510.50 54 5 535 S E 510.50 $2 in 52o 3 IF the paper mill sets the price oF paper to sell to the boo