Which of the Following Is a Disadvantage of Dual Pricing

question 8

Multiple Choice

Which of the following is a disadvantage of dual pricing?

• A) It strongly preserves the autonomy of divisions, and the division managers are motivated to put forth effort to increase the operating income of their respective divisions, causing inefficiencies.
• B) The price arrived by using dual pricing has no specific relationship to either costs or the market price.
• C) It insulates managers from the realities of the marketplace because costs, not market prices, affect the revenues of the supplying division.
• D) It assumes that the minimum transfer price equals the incremental cost per unit incurred up to the point of transfer minus the opportunity cost per unit to the selling division.

Evaluate the arguments for and against minimum wage laws and other price controls.

Appreciate the complexity of real-world labor markets and the implications of government intervention.

Understand the concept and implications of price ceilings and floors in markets.

Comprehend the effects of binding minimum wages on labor market outcomes, including employment levels.

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