Geppetto and Lewis agree to trade at a rate of 3 puzzles for puppet. With those terms of trade, who is most likely to be the supplier of puzzlesProduction Possibilities SchedulesGeppetto LewisPuzzles Puppets Puzzles Puppets100 0 50 0 80 4 40 5 60 8 30 10 40 12 20 15 20 16 10 20 0 20 0 25a. Geppetto and Lewis agree to trade at a rate of 3 puzzles for each puppet. With those terms of trade, is most likely to be the supplier of puzzles andis most likely to be the supplier of puppets. b. The two toy store owners agree to specialize and to trade 30 puzzles for 10 puppets. The terms of trade are still 3 puzzles for each puppet. After they complete their trade, Geppetto will have puzzles and puppets and Lewis will have puzzles and puppets.

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided on intracompany sales. a. what is the lowest acceptable transfer price from the perspective of the selling division? b. what is the highest acceptable transfer price from the perspective of the buying division? c. what is the range of acceptable transfer prices (if any) between the two divisions? if the managers are free to negotiate and make decisions on their own, will a transfer probably take place?