The efficient transfer price is
a. the upstream division's average cost
b. the upstream division's marginal cost
c. the downstream division's average cost
d. the downstream division's marginal cost
b
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What will be an ideal response?
The Solo Coal Mine is the only employer in the small town of Way out there. The market supply of coal miners is Qs = 0.02W - 400 and Qd = 500 - 0.02W, where W is the annual wage of a coal miner and Q is the number of coal miners. What is the deadweight loss due to the monopsony in the coal miners market?
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