When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market
a. It is appropriate to ignore that the market price includes a margin above marginal cost
b. Consider whether the product on the market includes costly features your downstream division does not use
c. it is OK if the product on the market is inexpensive because its quality is lower than you use
d. if it is similar enough, it is justification for you producing it in-house
b
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U.S. households use about 75 gallons of water per capita per day on the average because
A) the price they must pay for water is low. B) there is so much fresh water in the U.S. C) they use water in irrational ways. D) water is a basic necessity of life. E) water is a basic right.
Normative analysis:
A. aims at determining only the economic consequences of a particular policy. B. does not depend on the analyst's values. C. addresses the question of whether a policy should be used. D. focuses on the actual effects of a policy.