Transfer prices should be set to so
A) to maximize profits for only one unit in a multi-unit firm.
B) allow arbitrage with the external market place.
C) to maximize profits for the overall firm.
D) none of these choices.
QUESTION 2Internal markets
A) are used to determine a transfer price.
B) are common in corporate America.
C) are part of a firm's vertical network.
D) all of these choices.
QUESTION 3In general, the structure of a business firm
A) looks like a market.
B) looks like a flat network.
C) is largely determined by legal considerations.
D) seems more like a central planning agency than a market.
QUESTION 4Central planners
A) know more than the market.
B) know less than the market knows.
C) process information more efficiently than the market.
D) can predetermine equilibrium prices.
QUESTION 5The market process is a
A) path to discovery.
B) simple process.
C) theoretical concept that reveals little useful information.
D) none of these choices.
QUESTION 6Managers need to enforce property rights inside a firm.
Indicate whether the statement is true or false
QUESTION 7Relational contracts contract for every possible contingency
Indicate whether the statement is true or false
QUESTION 8There is no need to allocate property rights in a market-based firm.
Indicate whether the statement is true or false
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