Chipper Division of Acme Corp

question 12

Multiple Choice

Chipper Division of Acme Corp.sells 80,000 units of part Z-25 to the outside market.Part Z-25 sells for $40,has a variable cost of $22,and a fixed cost per unit of $10.Chipper has a capacity to produce 100,000 units per period.Jones Division currently purchases 10,000 units of part Z-25 from Chipper for $40.Jones has been approached by an outside supplier willing to supply the parts for $36.If Acme uses a negotiated transfer pricing system,what is the minimum transfer price that should be charged for this transaction?

• A)$40.
• B)$36.
• C)$32.
• D)$22.

Analyze the impact of product differentiation on market power and consumer choice.

Appreciate the implications of short-run and long-run equilibriums on profits in monopolistic competition.

Understand the profitability analysis for firms in monopolistically competitive markets.

Identify the conditions for profit maximization in different competitive environments.

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Definitions:

Negative Outcomes

Unfavorable results or consequences of an action or situation that are harmful or undesirable.

Suicide

The act of intentionally causing one's own death.

Attempt

The act of trying to achieve something, typically something challenging or difficult to attain.

Internalization

The process by which individuals integrate beliefs, values, standards, and norms from external sources into their own personal value system.