Doorway Computers manufactures PCs,and also produces the special DVD drives that go into each PC.Demand for computers is estimated to be: P = 2,000 - 0.1Q,where Q denotes units sold per month,and P is the price of the PC.The firm's total cost is C = 40,000 + 800Q + CD,where CD denotes the firm's total cost of producing drives.Currently,CD = 100QD,that is,the firm's cost per drive is $100.
(a)If there is no external market for DVD drives,how many computers should Doorway produce and sell in order to maximize profit? What transfer price should the firm set for disk drives?

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The Answer of Doorway Computers manufactures PCs,and also produces the special DVD drives that go into each PC.Demand for computers is estimated to be: P = 2,000 - 0.1Q,where Q denotes units sold per month,and P is the price of the PC.The firm's total cost is C = 40,000 + 800Q + CD,where CD denotes the firm's total cost of producing drives.Currently,CD = 100QD,that is,the firm's cost per drive is $100.
(a)If there is no external market for DVD drives,how many computers should Doorway produce and sell in order to maximize profit? What transfer price should the firm set for disk drives?

Doorway Computers Manufactures PCs,and Also Produces the Special DVD Drives