To Circumvent the Problem of Double Marginalization

question 4

Multiple Choice

To circumvent the problem of double marginalization:

• A) transfer prices must be set that maximize the overall value of the firm rather than the profits of the upstream division.
• B) firms should engage in two-part pricing, unless it is possible to engage in either first- or second-degree price discrimination.
• C) firms should vertically integrate.
• D) None of the answers are correct.

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Definitions:

Septet

A splitting pattern observed in nuclear magnetic resonance (NMR) spectroscopy indicating that a nucleus is coupled to six equivalent protons, giving seven peaks.

Trimethylcyclohexane Isomers

Different structural forms of the compound trimethylcyclohexane, which differ in the position of the methyl groups attached to the cyclohexane ring.

NMR

Nuclear Magnetic Resonance (NMR) is an analytical technique used to determine the structure of molecules by observing the interaction of atomic nuclei with magnetic fields.

Molecular Formula

A representation of the types and numbers of atoms in a molecule without indicating how they are bonded together.