Graph 8-1 
-According to Graph 8-1, the loss in total welfare resulting from the levying of the tax is represented by area:
Definitions:
Negotiated Price Approach
An approach to transfer pricing that allows managers of decentralized units to agree (negotiate) among themselves as to the transfer price.
Transfer Price
The price at which divisions of a company transact with each other, such as the sale of goods or services, often used for budgeting and tax purposes.
Decentralization
The process of distributing or dispersing functions, powers, people, or things away from a central location or authority.
Operating Costs
Expenses associated with the day-to-day operations of a business, excluding the cost of raw materials and direct labor.
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