The transfer price between subsidiaries that maximizes profit for the parent company
A) is the marginal cost of the producing subsidiary.
B) is the monopoly price of the producing subsidiary.
C) cannot be determined in the absence of non-production cost considerations such as taxes.
D) is the price that minimizes the purchasing subsidiary's marginal cost.
C
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The figure above shows Clara's demand for CDs. If the price for a CD is $15, then Clara
A) receives no consumer surplus on the 6th CD she buys. B) receives a total of $10 of consumer surplus. C) will buy no CDs. D) receives a total of $40 of consumer surplus.
If saving is greater than intended investment, the economy is
a. in equilibrium, and there is no change in business inventories b. not in equilibrium, and business inventories will decrease c. in equilibrium, and actual investment is equal to intended investment d. not in equilibrium, and business inventories will increase e. not in equilibrium, and the level of income will rise
A bank's total reserves consist of
A. vault cash and Treasury bills. B. vault cash only. C. all assets. D. vault cash and reserve deposits held at a regional Federal Reserve Bank.
Under a system of flexible exchange rates, an increase in demand for a nation's currency in the foreign exchange market will
a. cause the nation's currency to appreciate. b. make it more expensive for the nation to import goods. c. cause the nation's balance on current account to shift toward a surplus. d. make it less expensive for foreigners to buy the nation's goods.