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ppose that the inverse demand for a downstream firm is P = 240 3Q. Its upstream division produces a critical input with costs of Cu(Q)
ppose that the inverse demand for a downstream firm is P = 240 3Q. Its upstream division produces a critical input with costs of Cu(Q) = 3(Q2). The downstream firm's cost is Cd(Q) = 30Q. When there is no external market for the downstream firm's critical input, the transfer price the downstream firm should charge is:
$52.5
$105
$75
None of the above.
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