What is the optimal output for the production division

Reference no: EM13186743

The Xerxes Company is composed of a marketing division and a production division. The marketing division packages and distributes a plastic item made by the production division. The demand curve for he finished product sold by the marketing division is

P0 = 200 - 3Q0

Where P0 is the price (in dollars per pound) of the finished product and Q0 is the quantity sold (in thousands of pounds). Excluding the production cost of the basic plastic item, the marketing division's total cost function is

TC0 = 100 + 15Q0

Where TC0 is the marketing division's total cost (in thousands of dollars) the production division's total cost function is

TC1 = 5 + 3Q1 + 0.4Q12

Where TC1 is the total production cost (in thousands of dollars) and Q1 is the total quantity produced of the basic plastic item (in thousands of pounds). There is a perfectly competitive market for the basic plastic item, the price being $20 per pound.

a. What is the optimal output for the production division?

b. What is the optimal output for the marketing division?

c. What is the optimal transfer price for the basic plastic item?

d. At what price should the marketing division sell its product?

Reference no: EM13186743

Questions Cloud

State the calorimeter loses only negligible quantity of heat : The density of water = 1.000 g/mL. The liquid's final volume is not changed by adding the solid. The calorimeter loses only a negligible quantity of heat.

Itemize the adjustments and the corresponding value. : The Columbia Company manufactures a battery-powered saw. Due to increased demand during the past few years, Columbia has increased plant capacity for the saw to 300,000 units. The firm's expected output and sales for the next year in their normal..

State the reaction is between furan and maleic anhydride : The reaction is between furan and maleic anhydride. Using 0.19 g of furan and 0.24 g of maleic anhydride.

Is pizzo''s firm the dominant firm in the industry : James Pizzo is the president of a firm that is the industry price leader; that is, it sets the price and the other firms sell all they want at that price. In other words, the other firms act as perfect competitors. The demand curve for this indust..

What is the optimal output for the production division : The Xerxes Company is composed of a marketing division and a production division. The marketing division packages and distributes a plastic item made by the production division. The demand curve for he finished product sold by the marketing divisi..

Compute the final pressure of gas a : Bulb B has 0.4 mole of ideal gas B at a pressure of 3 atm and is at 100 C. Calculate the final pressure of gas A when the two bulbs are open to each other.

Draw bonding orbitals that result from combinations : Sketch bonding orbitals that result from combinations of the following orbitals on separate atoms (a) pz and dz2 (b) s and pz (c) dx2-y2 and dx2-y2

What price should managers charge in each market : The demand curve for the firm's output in the second market is P2 = 80 - 2Q2, where P2 is the price of the product and Q2 is the amount sold in the second market. The firm's marginal cost curve is 5 + Q, where Q is the firm's entire output (destin..

State distillation flask the instant all of the azeotrope : A mixture consisting of 50 grams ethanol and 50 grams water is distilled using an efficient column. How much water will remain in the distillation flask the instant all of the azeotrope has distilled?

User Account

All Pages