ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The Timex Group, a large multinational watchmaker, has its headquarters in the Netherlands. It has subsidiaries in many countries, including the Timex Group USA and TMX Philippines, Inc. One
particular type of speciality watch is produced in the Philippines for export to the Timex Group USA. Suppose the inverse demand curve for this watch in the United States is
p=130-20,
where p is measured in dollars and O is measured in thousands of watches per week. These watches are produced at a constant marginal cost of $10 per watch by TMX Philippines. Timex USA treats
the transfer price charged by TMX
as its marginal cost.
What transfer price would maximize the profit of TMX Philippines? (Hint: For any given transfer price the Timex Group USA will demand some quantity of watches. This relationship determines the
demand facing TMX Philippines)
If TMX Philippines maximies their own profit, then they will charge a transfer price of $
(Enter your response as a whole number)
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Transcribed Image Text:The Timex Group, a large multinational watchmaker, has its headquarters in the Netherlands. It has subsidiaries in many countries, including the Timex Group USA and TMX Philippines, Inc. One particular type of speciality watch is produced in the Philippines for export to the Timex Group USA. Suppose the inverse demand curve for this watch in the United States is p=130-20, where p is measured in dollars and O is measured in thousands of watches per week. These watches are produced at a constant marginal cost of $10 per watch by TMX Philippines. Timex USA treats the transfer price charged by TMX as its marginal cost. What transfer price would maximize the profit of TMX Philippines? (Hint: For any given transfer price the Timex Group USA will demand some quantity of watches. This relationship determines the demand facing TMX Philippines) If TMX Philippines maximies their own profit, then they will charge a transfer price of $ (Enter your response as a whole number)
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