Which of the following is an advantage(s)of using market prices in a competitive market?
A)Both buying and selling divisions can buy and sell as many units as they want at market price.
B)Managers of both buying and selling divisions are indifferent between trading with each other or with outsiders.
C)From the company's perspective,this arrangement is fine as long as the selling division is operating at capacity.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

All of the answers are correct. Using market prices in a competitive market ensures that both buying and selling divisions are able to buy and sell as many units as they want at the market price. It also means that managers of both buying and selling divisions are indifferent between trading with each other or with outsiders, which promotes efficiency and transparency in the market. The arrangement works well for the company as long as the selling division is operating at capacity, which allows for maximum profitability. Overall, using market prices in a competitive market helps to ensure fair and efficient transactions that benefit all parties involved.

Which of the Following Is an Advantage(s)of Using Market Prices