Suppose That the Inverse Demand for a Downstream Firm Is

question 35

Multiple Choice

Suppose that the inverse demand for a downstream firm is P = 150 − Q.Its upstream division produces a critical input with costs of C_U(Q_d) = 5(Q_d ) ².The downstream firm's cost is C_d(Q) = 10Q.When there is no external market for the downstream firm's critical input,the downstream firm should produce:

• A) 11.67 units.
• B) 12.5 units.
• C) 14 units.
• D) 15 units.

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