You Have Been Provided with the Following Information for Division

question 26

Multiple Choice

You have been provided with the following information for Division X of a decentralized company: Division W would like to purchase all of its units internally.Division W needs 6,000 units each period and currently pays $42 per unit to an outside firm.What is the lowest price that Division X could accept from Division W? Assume that Division W wants to use a sole supplier and will not purchase less than 6,000 from a supplier.

• A)$45.
• B)$42.
• C)$40.
• D)$38.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at any specific time.

Interest Rate

The expense, quantified as a percentage of the principal, charged by a lender to a borrower for the use of resources.

Demand for Money

The desire to hold cash or easily liquidable assets, influenced by interest rates, income levels, and economic activity.

Contractionary Monetary Policy

A form of monetary policy that aims to reduce the rate of monetary expansion to tackle inflation, often by increasing interest rates.