Transfer pricing-optimal output equation

Assignment Help Microeconomics

Reference no: EM1370277

A firm sells specialized electronic computers. Each of the computers has a unique chip produced at a California plant at cost of Cw(Qc)=Q^2 c

[C subscript w *(Q subscript c)=Q squared subscript c.]

Once produced, the chips are shipped to the firm's new jersey east coast plant where the computers are then assembled, packaged and shipped to market at a cost of Ce(Q)=200Q. [C sub e * Q=200Q]
Demand was recently estimated for the computers and found to be P=5000-Q.

Given this,

1. what is optimal output for the computers?

2. what is optimal transfer price between the two plants?

Reference no: EM1370277

Questions Cloud

Isoquant-isocost diagram : Employ an isoquant and isocost diagram and words to show how firms will respond to the decrease in the wage rate. Be sure to identify the short run scale effect and the long run substitution effect.

Create time algorithm-minimum time required to finish task : Create the O(|V | + | E |) time algorithm which, given times ti and the dependencies, determines minimum time required to complete all the tasks.

Solve for the overall equilibrium : Suppose that the interest rate is determined by; M/P=d1Y-d2i, where P is the price level, Y is real GDP and M/P is real money stock,

Explain management often disagrees with the use of seniority : Explain Management often disagrees with the use of seniority to determine promotion decision

Transfer pricing-optimal output equation : A firm sells specialized electronic computers. Each of the computers has a unique chip produced at a California plant at cost of Cw(Qc)=Q^2 c

Explain the use of alcohol and drug testing of job : Explain The use of alcohol and drug testing of job applicants and employees has become a complicated and critically important job security issue

Determining wage rate : Suppose XYZ can sell up to 40 units of output per hour at a price of $.60 per unit but cannot even get a penny for units produced in excess of 40 units per hour. How much output should XYZ produce each hour in order to maximize profits?

Cost and demand function : In the short run, company that seek to maximize their market share will tend to charge lower price for their products than firms that seek to maximize profit.

Create simple 8-bit alu using add-subtract-shift functions : Create a simple 8-bit ALU. Requirements:The eight functions that you will implement are: add, subtract, and, or, shift left logical, less than, shift right logical.

User Account

All Pages