When Companies Do Not Want to Use Market Prices or Find

question 111

Multiple Choice

When companies do not want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur.

• A) average-cost
• B) full-cost
• C) long-run cost
• D) short-run average cost

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Definitions:

Transfer Price

The cost at which products or services are exchanged between departments within the same corporation or among associated companies.

Pump Division

A specific sector or unit within a company that focuses on the production or sale of pumps.

Pool Products Division

A specialized business unit within a company that focuses on the development, manufacture, and distribution of products for pools, including chemicals, pumps, and accessories.

Service Departments

Units within an organization that support the production process but do not directly engage in manufacturing activities.