In General, If a Potential Transfer Has No Effect on Divisional

question 30

Multiple Choice

In general, if a potential transfer has no effect on divisional profits:

• A) no transfer will take place between the divisions.
• B) managers will be indifferent between making the transfer or not.
• C) the organization should not intervene to force a transfer.
• D) the optimal transfer price is the opportunity cost for the buying division.

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Definitions:

Supply

The total amount of a product or service available for purchase at any given price point.

Price Elasticity

A gauge of the degree to which the amount of a good sought or offered adjusts when there's a change in its price.

Demand

The consumers' willingness and ability to purchase a product or service at a given price.

Cross Price Elasticity

A measure of the responsiveness of the quantity demanded for one good to a change in the price of another good, indicating the degree of substitutability or complementarity between them.