Question
Suppose Race Car Motors has the following demand for its automobiles: P = 20,000 - Q Suppose its downstream division's cost of assembling cars is:
Suppose Race Car Motors has the following demand for its automobiles:
P = 20,000 - Q
Suppose its downstream division's cost of assembling cars is: CA(Q) =8000Q, while its upstream division's cost of producing engines is CE(QE) = 2QE2
If there is no outside market for its engines, how many engines and cars should the firm produce to maximize profits and what should the optimal transfer price be?
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Demand curve P 20000 Q 20000 Qa Qe P 20000 Qa Qe Total revenue for a...
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Managerial Economics
Authors: Paul Keat, Philip K Young, Steve Erfle
7th edition
0133020266, 978-0133020267
