​When Considering Setting the Transfer Price at the Market Price

question 3

Multiple Choice

​When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

• A)​It is appropriate to ignore that the market price includes a margin above marginal cost
• B)It is OK if the product on the market includes costly features your downstream division does not use
• C)It is OK if the product on the market is inexpensive because its quality is lower than you use
• D)​If it is similar enough,it calls into question whether there are gains from producing it in-house

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Definitions:

Deep Acting

An emotional labor strategy where individuals try to align their genuine feelings with the emotions they are required to display in their job.

Surface Acting

The process of altering one's external expression to match expected emotions while internal feelings remain unchanged.

Continuance Commitment

An individual’s psychological attachment to an organization based on the costs associated with leaving it, such as loss of benefits or the absence of equivalent job alternatives.

Time Investments

The allocation of time resources towards activities or goals expected to yield beneficial returns or outcomes.