Posted: March 7th, 2017

The Locust Corporation is composed on a markedting division and a production division.

The Locust Corporation is composed on a markedting division and a production division. The marginal cost of producing a unit of the firm s product is $10 per unit, and the marginal cost of marketing it is $4 per unit. The demand curve for the firm s product is:
P + 100 0.01Q
where P is the price per unit (in dollars) and Q is output (in units). There is no external market for the good made by the production division.
a. What is the firm s optimal output?
b. What price should the firm charge?
c. How much should the production division charge the marketing division for each unit of the product?