Suppose that the inverse demand for a downstream firm is P = 150 ? Q. Its upstream division produces a critical input with costs of CU(Qd) = 5(Qd)2. The downstream firm's cost is Cd(Q) = 10Q. When there is no external market for the downstream firm's critical input, the marginal revenue for the downstream firm is:
A. MRd(Q) = 140 ? Q.
B. MRd(Q) = 150 ? 2Q.
C. MRd(Q) = 150 ? Q.
D. MRd(Q) = 140 ? 2Q.
Answer: B
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