Holmstrom and Tirole note "The economist's first instinct is to set transfer price equal to marginal cost." However, a distinct plurality of companies uses the full-cost method. That is because:
A. it is simple and has a low cost of implementation.
B. it is identical to using a marginal cost approach to transfer prices.
C. the results are much better in the field with full-cost method.
D. most companies do not employ economists.
Answer: A
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