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.

---

Definitions:

Needy

Individuals or groups requiring assistance due to poverty, deprivation, or significant need.

Defendant

A party against whom a lawsuit is brought.

Contract Law

A domain of law that governs the creation, execution, and enforcement of agreements between parties.

Corporate Law

Law that governs the formation, financing, merger and acquisition, and termination of corporations, as well as the rights and duties of those who own and run the corporation.