Under imperfect competition,the transfer price should be set at a suitable ________ to the external price in order to induce the manager of the buying division to seek internal transfers.

Question

Quizplus · Accepted Answer

The transfer price in imperfect competition should be set at a discount to the external price to encourage internal transfers. This is because the buying division may have the option to purchase from an external supplier, and setting the transfer price at a discount would make it more financially attractive for the buying division to purchase from the selling division within the company instead.

Under Imperfect Competition,the Transfer Price Should Be Set at a Suitable