Where There Is a Perfectly Competitive External Market for a Transfer

question 17

Multiple Choice

Where there is a perfectly competitive external market for a transfer product, the final product division should pay the transfer product division a price:

• A) in excess of that at which the transfer product can be obtained from outside suppliers.
• B) that is the prevailing, perfectly competitive, external market price.
• C) that is less than the transfer product division can obtain in the external market.
• D) equal to the marginal cost of the transfer division at the output level where the final product division maximizes profit.
• E) equal to the marginal cost of the final product division at the output level where the transfer product division maximizes profit.

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Definitions:

Intuition

Intuition is the ability to understand or know something immediately, based on feelings rather than conscious reasoning or factual evidence.

Gut-Level

A response or reaction based on instinctive emotional feelings rather than considered thought.

Employment Decisions

The process of making choices related to hiring, retaining, promoting, and terminating employees within an organization, based on factors like skills, performance, and organizational needs.

Hindsight Bias

The predisposition to claim that, had one known, the result of an event could have been foreseen or expected.