The basic incentive problem associated with internal transfers is that:
A)divisional managers have private information about opportunity costs.
B)divisional managers have only public information about opportunity costs.
C)senior management have private information about opportunity costs.
D)senior management make all information about opportunity costs public.

Question

Quizplus · Accepted Answer

The basic incentive problem associated with internal transfers is that divisional managers have private information about opportunity costs. This means that they may not reveal their true opportunity costs to senior management, potentially leading to inefficient allocation of resources.

The Basic Incentive Problem Associated with Internal Transfers Is That