When considering setting the transfer price at the market price of a product similar to the ...

When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market
 a. It is important to recognize that the market price includes a margin above marginal cost
  b. It is OK if the product on the market includes costly features your downstream division does not use
  c. it is OK if the product on the market is inexpensive because its quality is lower than you use
  d. if it is similar enough, it is justification for you producing it in-house

QUESTION 2

Starting salaries for female OB/GYNs are higher than those of male OB/GYNs. What is the best explanation for this?
 a. Female OB/GYNs have more human capital than male OB/GYNs.
  b. Female OB/GYNs are smarter than male OB/GYNs.
  c. The demand for female OB/GYNs is greater than the demand for male OB/GYNs.
  d. The demand for female OB/GYNs is less than the demand for male OB/GYNs.
  e. More males are in OB/GYN residency programs than females.

QUESTION 3

Suppose there are two goods (X and Y). On a traditional graph of a budget line a tripling of all prices and incomes will
 a. alter the slope of the budget line only.
  b. alter the slope of the budget line as well as the Y-intercept.
  c. alter the slope of the budget line as well as the X-intercept.
  d. leave the budget line unaltered.

QUESTION 4

A problem with using the price of a product similar to the intermediate good sold on the market is
 a. the market price includes a margin above marginal cost
  b. the product on the market may include costly features your downstream division does not use
  c. the product on the market may be cheap because it is not as high of quality as your downstream division uses
  d. all of the above

QUESTION 5

Physicians salaries increased substantially over the decade 1995-2005 from an average of 215,000 to 315,000 . What is the best explanation for this?
 a. Physicians were smarter in 2005 than in 1995.
  b. The supply of physicians has increased.
  c. The supply of physicians has decreased.
  d. The demand for physicians has increased.
  e. The demand for physicians has decreased.

QUESTION 6

Suppose you were to believe that money illusion exists that is as prices and incomes both rise proportionally, people buy more. Which of the following characteristics of demand does that cause you to doubt?
 a. demand functions are downward sloping
  b. demand has a positive vertical intercept
  c. demand has a positive horizontal intercept.
  d. demand functions are homogeneous of degree zero.

QUESTION 7

If it is particularly difficult for the corporate headquarters to determine the correct transfer price
 a. average costs is a good enough approximation
  b. average variable costs is a good enough approximation
  c. a similar products market price is a good enough approximation
  d. the upstream division could be run as a cost center

QUESTION 8

Suppose the number of medical school graduates continues to increase over the next decade. Which of the following is true?
 a. Physicians' salaries must fall.
  b. Physicians' salaries must rise.
  c. Physicians' salaries will fall only if the demand for medical services falls.
  d. Physicians' salaries will fall if the demand for medical services rises more than the supply of physicians rises.
  e. Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises.