(1) A vertically integrated firm has 2 divisions; upstream and downstream divisions. The upstream division produces chemical...
Fantastic news! We've Found the answer you've been seeking!
Question:
(1)
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 QUis 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. | |
None of the above. |
Related Book For
Posted Date: