Dual Pricing Reduces the Goal-Congruence Problem Associated with a Pure

question 22

True/False

Dual pricing reduces the goal-congruence problem associated with a pure cost-based transfer-pricing method.

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Definitions:

Weak Axiom

A fundamental principle in consumer theory that if a consumer chooses bundle A over bundle B when both are affordable, then the consumer will not choose B over A if A's price decreases or B's price increases, all else being equal.

Profit Maximization

The process by which a firm determines the price and output level that returns the greatest profit.

Input Increases

A scenario in production or economics where the quantity of resources used in the production process is increased, potentially affecting outputs.

Price of Output

The market price at which a product or service is sold, determined by various factors including production costs, supply and demand, and market competition.