=+

(a) to determine the optimal output level to maximize Baron's profit, and the transfer price consistent with this level;

(b) to show the profits of each division at the optimal solution;

(c) to show the profits for each division and the transfer prices associated with:

(i) the supplier acting as an internal monopolist;

(ii) the user acting as an internal monopsonist;

(d) to show the effect on divisional profits when the supplier's unit cost (C m ) is:

(i) 99

(ii) 107 - 0.1Q instead of 19 + Q