The "Floor" in Transfer Pricing Is

question 129

Multiple Choice

The "floor" in transfer pricing is

• A)the transfer price that would leave the buying division no worse off if an input is purchased from an internal division.
• B)the transfer price that would leave the selling division no worse off if the good is sold to an internal division.
• C)the transfer price that would leave the buying division worse off if an input is purchased from an internal division.
• D)none of these.

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Definitions:

Economic Profit

The distinction in totality between incomes and costs, inclusive of both transparent and concealed expenses.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full industry adjustment.

Economies of Scale

Economies of Scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market.