(Appendix 11A) Ahart Products, Inc

question 94

Multiple Choice

(Appendix 11A) Ahart Products, Inc., has a Transmitter Division that manufactures and sells a number of products, including a standard transmitter that could be used by another division in the company, the Remote Devices Division, in one of its products. Data concerning that transmitter appear below:
The Remote Devices Division is currently purchasing 4,000 of these transmitters per year from an overseas supplier at a cost of $59 per transmitter.
-What is the maximum price that the Remote Devices Division should be willing to pay for transmitters transferred from the Transmitter Division?

• A) $8 per unit
• B) $50 per unit
• C) $59 per unit
• D) $42 per unit

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Definitions:

Purely Competitive Seller

Refers to a market participant in an industry structure where many sellers offer identical products, and no single seller can influence price or market conditions.

Demand (D)

A consumer's desire and willingness to pay a price for a specific good or service, holding all other factors constant.

Marginal Revenue (MR)

Marginal Revenue is the additional income that is obtained from selling one more unit of a good or service.

Pure Monopolist

A market structure wherein a single company or entity has exclusive control over the production and sale of a particular product or service, with no close substitutes.