If each division of a company with a monopoly niche is allowed to set its transfer price at the profit-maximizing level for the next division as the product flows toward the consumer (assuming no external market for the product), then prices will:
A. match the competitive benchmark and profits will be zero.
B. be lower and profits higher than with a non-divisional organization.
C. be higher and profits lower than with non-divisional organization.
D. be the same and profits will be the same as with a non-divisional organization.
Answer: C
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