Figure 11A.1
-The Acme Oil Company is a vertically integrated firm. It explores for and extracts crude oil. It also refines the crude oil into gasoline and other products, and sells these products to consumers. The internal price that Acme Oil uses when the crude oil that it extracts is "sold" to one of its refineries is called:
A) the shadow price.
B) the transfer price.
C) the market price.
D) the non-market price.
E) none of the above

Question

Figure 11A.1
-The Acme Oil Company is a vertically integrated firm. It explores for and extracts crude oil. It also refines the crude oil into gasoline and other products, and sells these products to consumers. The internal price that Acme Oil uses when the crude oil that it extracts is "sold" to one of its refineries is called:
A) the shadow price. 
B) the transfer price. 
C) the market price. 
D) the non-market price. 
E) none of the above

Quizplus · Accepted Answer

The internal price that Acme Oil Company uses when the crude oil that it extracts is "sold" to one of its refineries is called a transfer price.

Figure 11A.1 -The Acme Oil Company Is a Vertically Integrated Firm. It