When a transfer price is set higher
a. the buying division will chose to purchase less from the selling division
b. the buying division will chose to purchase more from the selling division
c. the selling division will chose to purchase less from the buying division
d. the selling division will chose to purchase more from the buying division
QUESTION 2What is the most significant cost of attending medical school?
a. Tuition and fees.
b. Books and incidentals.
c. The income foregone.
d. Room and board.
e. Pain and suffering.
QUESTION 3If an individual has a constant MRS of shoes for sneakers of 3/4 (that is, he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he or she will
a. buy only sneakers.
b. buy only shoes.
c. spend his or her income equally on sneakers and shoes.
d. wear sneakers only 3/4 of the time.
QUESTION 4When a transfer price is set lower
a. the costs of the division using the intermediate product will fall
b. the profits of the division using the intermediate product will be unaffected
c. the profits of the division using the intermediate product will fall
d. the profits of the division using the intermediate product will rise
QUESTION 5If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be?
a. W1 and E1
b. W2 and E0
c. W0 and E0
d. W0 and E1
e. W0 and E2
QUESTION 6If the price of X falls, the budget constraint
a. shifts outward in a parallel fashion.
b. shifts inward in a parallel fashion.
c. rotates outward about the X-intercept.
d. rotates outward about the Y-intercept.
QUESTION 7When a transfer price is set higher
a. the profits of the division using the intermediate product will rise
b. the profits of the division using the intermediate product will be unaffected
c. the profits of the division using the intermediate product will fall
d. the costs of the division using the intermediate product will fall
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