When Considering Setting the Transfer Price at the Market Price

question 16

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)Consider whether 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 is justification for you producing it in-house

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Definitions:

Government Policies

Guidelines or principles adopted by a government to achieve its objectives.

Abstract Good

denotes the idea of goodness or value that is theoretical and not tied to specific, tangible benefits or outcomes.

Divine Command Theory

A philosophical stance arguing that morality is ultimately based on the commands or character of God.

Moral Decisions

Moral decisions involve choosing actions based on ethical principles and values, considering what is right or wrong, good or bad in a given situation.