# Managerial Economics problem

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 is

P_0=200-3Q_0

Where P_0 is the price (in dollars per pound) of the finished product and Q_0 is the quantity sold

(in thousands of pounds). Excluding the production cost of the basic plastic item, marketing

division’s total cost function is

TC_0=100+15Q_0

Where TC_0 is the marketing division’s total cost (in thousands of dollars). The production

division’s total cost function is

TC_1=5+3Q_1 + 0.4Q_1^2

Where TC_1 is total production cost (in thousands of dollars) and Q_1 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?

Do you need a similar assignment written for you from scratch? We have qualified writers to help you.
You can rest assured of an A+ quality paper that is plagiarism free. Order now for a FREE first Assignment!
Use Discount Code "**FREE**" for a 100% Discount!

NB: We do not resell papers. Upon ordering, we write an original paper exclusively for you.