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Now assume that the firm is divided into two profit centers: the assembly division and the distribution division. The assembly division assembles the product at a total cost of 500 x Q and then transfers it to the distribution division that faces the firm's demand curve. The distribution division has no costs other than the transfer price and the distribution costs for the product. Assume that the assembly division has the power to set the transfer price and that the distribution division can only buy internally. The distribution division, however, can select the quantity to purchase.
a. Identify/describe the distribution division's problem.
b. Solve the distribution division's problem.
Compute the price of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z.
Illustrate what implications would increasing worker protections have upon the ability of American companies to compete globally.
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Backward-looking expectations may reasonably describe actual behavior because
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A large firm has two divisions: an upstream division that is a monopoly supplier of an input whose only market is the downstream division that produces the final output. To produce one unit of the final output, the downstream division requires one un..
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