When a transfer price is set higher
a. the buying division will chose to purchase less from the selling division
b. the buying division will chose to purchase more from the selling division
c. the selling division will chose to purchase less from the buying division
d. the selling division will chose to purchase more from the buying division
a
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If a mutual fund with a back-end-load is not sold within the stipulated time period, the investor is not required to pay any fee to the fund manager
a. True b. False Indicate whether the statement is true or false
Suppose an insurance company has estimated that 20 percent of all of its potential policy owners are high-cost and sets a price for their insurance policy with the understanding that 20 percent of its policy owners will be high-cost. If the true percentage of high-cost potential policy owners is 40 percent, the insurance company is likely to face ________.
A) moral hazard B) the principal-agent problem C) adverse selection D) the bad apple problem