A Company Is Highly Centralized

question 130

Multiple Choice

A company is highly centralized. The Cutting Division, which is operating at capacity, produces a component that it currently sells in a perfectly competitive market for $13 per unit. At the current level of production, the fixed cost of producing this component is $4 per unit and the variable cost is $7 per unit. The Grinding Division would like to purchase this component from the Cutting Division. The price that the Cutting Division should charge the Grinding Division per unit for this component is:

• A) $7.
• B) $11.
• C) $13.
• D) $15.

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Ego

In psychoanalytic theory, the part of the mind that mediates between the conscious and the unconscious and is responsible for reality testing and a sense of personal identity.

Conscience

An individual's internal moral compass, guiding distinctions between right and wrong.

Morality

Principles concerning the distinction between right and wrong or good and bad behavior, often influenced by culture, religion, or personal beliefs.