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When the Selling Division Can Sell and the Buying Division

question 137

True/False

When the selling division can sell and the buying division can buy externally at the market price, the company as a whole will be in the same position whether or not a market price transfer takes place internally.


Definitions:

Long-Run Equilibrium

A state in which all inputs in production can be adjusted, and there is no tendency for change in economic variables.

Average Total Cost

The per-unit cost of production, calculated by dividing the total cost of production by the number of units produced, including both fixed and variable costs.

Demand Schedule

A table that shows the relationship between the price of a good and the quantity demanded at each price level.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded by consumers.

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