Question 6 (10 marks) Consider production process that requires an upstream firm A to make an input, transfer to a downs
Posted: Wed Jul 06, 2022 6:18 pm
Question 6 (10 marks) Consider production process that requiresan upstream firm A to make an input, transfer to a downstream firmB, who then sells to the final consumer. One unit of input from Ais required for one unit of final output. The marginal cost ofproduction for firm A is 20 per unit. B has zero marginal costs.There are zero fixed costs. The final demand curve for endconsumers is P = 200 – q. a. What is the proft-maximising level ofoutput, the related price and profit, if A and B work together tomaximise joint profit.