Halifax & Smyth (H&S) Is a Clothier That Specializes in Expensive

question 44

Multiple Choice

Halifax & Smyth (H&S) is a clothier that specializes in expensive men's suits, and the firm makes the suits from wool fabrics that are woven by one of the firm's divisions. This division is the only source for this material, and H&S uses the optimal transfer price to determine the value of the wool fabric. What happens if the marginal cost of assembling the men's suits increases?

• A) The net marginal revenue (NMR) curve for wool fabric shifts upward, and wool (suit) production increases.
• B) The net marginal revenue (NMR) curve for wool fabric shifts upward, and wool (suit) production decreases.
• C) The net marginal revenue (NMR) curve for wool fabric shifts downward, and wool (suit) production increases.
• D) The net marginal revenue (NMR) curve for wool fabric shifts downward, and wool (suit) production decreases.

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Definitions:

Gate Theory

A theory that suggests the spinal cord contains a neurological "gate" that controls the transmission of pain signals to the brain.

Trichromatic Theory

A theory explaining how the human eye perceives colors through the response of three types of cones sensitive to blue, green, and red light.

Retinex Theory

suggests that color perception is not solely based on the wavelengths of light reaching the eye but also involves an active processing of visual information by the brain to maintain color constancy under different lighting conditions.

Cutaneous Senses

The sensory systems associated with the skin that detect touch, temperature, and pain.