A firm has a division that produces chemical Y, whose average total costs are ATC = 50 + 2Q (where Q is the quantity of Y), and a marketing division that adds its own average total costs of ATC = 20 + 3Q. There is no external market price of Y. What should be the transfer price?

Economics For Today
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Author:Tucker
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Chapter14: Environmental Economics
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A firm has a division that produces chemical Y, whose average total costs are ATC = 50 + 2Q (where Q is the quantity of Y), and a marketing division that adds its own average total costs of ATC = 20 + 3Q. There is no external market price of Y.

What should be the transfer price?

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