1. Theproductiondivision(p)ofthePortlandElectronicsCompany("PEC")manufacturesspeakers that it sells internally to the marketing division (m), which promotes and distributes the speakers to the end customers. Assume that there is no external market for the speakers that are manufactured by the production division. The marketing division's market demand for the speakers in the end customer segment is:

=100 0.001

Whereisthesellingprice(indollarsperunit)andisthequantitysold(inunits).Themarketingdivision'stotalcostfunction(indollars)is(excludingthepriceofspeakersthatitbuys from the production division):

=300,000+10

Theproductiondivision'stotalcostfunction(indollars)is:

=500,000+15+0.0005 ²

Whereisthetotalquantitysoldandproduced.

Whatistheoptimaltransferpriceatwhichtheproductiondivisionsellsthespeakerstothe marketing division so that the overall profits for PEC is maximized?