Use the Following Information for Questions

question 60

Multiple Choice

Use the following information for questions
The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32.
-Assuming the Wood Division has available capacity of 5,000 units, the minimum transfer price it should accept is

• A) $7.
• B) $25.
• C) $32.
• D) $55.

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Definitions:

Market Failure

Occurs when the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Resource Extraction

The process of retrieving natural resources from the earth, such as minerals, oil, and gas, for human use.

Weak Property Rights

A situation where the legal protections and enforcement mechanisms for ensuring ownership and control over property are inadequate or not effectively implemented.

Renewable Resources

Natural resources that can be replenished naturally over time, such as sunlight, wind, and water.