Spring Corp

question 109

Multiple Choice

Spring Corp.has two divisions,Daffodil and Tulip.Daffodil produces a gadget that Tulip could use in its production.Tulip currently purchases 100,000 gadgets for $12.50 on the open market.Daffodil's variable costs are $6 per widget while the full cost is $9.35.Daffodil sells gadgets for $13 each.If Daffodil is operating at capacity,what would be the minimum transfer price Daffodil would accept for an internal transfer?

• A)$6.00
• B)$9.35
• C)$12.50
• D)$13.00

Identify and explain determinants of market demand and supply.

Explain the difference between a change in supply (or demand) and a change in the quantity supplied (or demanded).

Understand the rationing function of prices in a market.

Interpret market equilibrium and its graphical representation.

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Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of interest payments.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on savings.

Monetary Neutrality

The idea that changes in the money supply only affect nominal variables (like prices) in the long run and have no effect on real variables (like output or employment).

Money Supply

The combined total of all monetary resources in an economy at a designated time, including cash, coins, and balances in checking and savings accounts.