Consider a firm - Wotzits Inc - with two profit centres, A and B. In the firm, profit centre A makes one input at a marginal cost of $40 which it transfers for a price t to profit centre B.A is the only source of the input. B transforms one unit of input into one unit of output at zero marginal cost and sells as a monopolist into a market with a demand curve of P = 120 - q, where P is price and q the quantity of output. a. If both A and B act together to maximise profit for the firm, what is the final price, output and profit for the firm.? (2 marks) b. Now assume that each profit centre acts to maximise its own profit. What is the transfer price t, the final output and price charged by B and the profit generated by both profit centres? What is the total profit generated by the firm? Explain the differences between your answer in part a with your answer here. Use a diagram to help provide some intuition. (4 marks) c. Devise a transfer pricing scheme that allows a firm that maximises firm profit. Assume that A and B have equal bargaining power, so they will share any profit generated equally. Explain your scheme. (4 marks) (Upload your scanned handwritten answer and submit via the Assignment folder. Please submit one scan for answers Question 18, 19 and 20)