If an Intermediate Market Exists but Divisions Are Prohibited from Buying

question 107

True/False

If an intermediate market exists but divisions are prohibited from buying or selling from the outside, the intermediate market can be ignored in determining the optimal transfer price.

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Definitions:

Corporate Form

A legal structure for businesses recognized by law as a separate legal entity with rights, privileges, and liabilities distinct from those of its owners.

Limited Liability

A legal principle that protects a company's shareholders from being personally responsible for the company's debts, limiting their losses to the amount invested.

U.S. Economy

The economic system of the United States, characterized by a mixed economy that supports free market activities with some governmental intervention.

Law Partnership

A business entity formed by lawyers who engage in the practice of law together.