A firm has a division that produces X,whose total costs are TC = 10 + Q² (where Q is the quantity of X).The marketing division adds its own total costs of 5 + 3Q.In the competitive external market for X,the wholesale price is $10.The transfer price of X should be: A) $2. B) $5. C) $10. D) $12. E) $15.

Question

Quizplus · Accepted Answer

The transfer price should be set at the market price of $10 to ensure that the internal transactions are aligned with the external market conditions. This approach ensures that the division producing X is neither advantaged nor disadvantaged by selling internally rather than externally.

A Firm Has a Division That Produces X,whose Total Costs