If a Product Has an External Market and Divisions Are

question 43

True/False

If a product has an external market and divisions are treated as profit centers, cost-based transfer prices can often lead to suboptimal decisions.

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Definitions:

Quantity Demanded

The aggregate demand for a product or service, defined as the overall quantity that buyers are ready and capable of buying at a specific price point in the marketplace.

Quantity Demanded

The complete sum of a certain good or service that consumers are ready and capable of buying at a determined price level.

Inferior Good

A type of good whose demand decreases as consumers' income increases, opposite to normal goods.

Normal Good

A good for which demand increases when consumer income rises, and falls when consumer income decreases.