A Firm Has a Division That Produces Chemical Y,whose Average

question 17

Multiple Choice

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.The transfer price of Y should be:

• A) $50.
• B) $4Q.
• C) $50 + 4Q.
• D) $2Q.
• E) $5Q.

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