If products similar to the intermediate good can be bought externally,an approximation of the correct transfer price is
A)average costs
B)average fixed costs
C)average variable costs
D)the market price

Question

​If products similar to the intermediate good can be bought externally,an approximation of the correct transfer price is
A)​average costs
B)average fixed costs
C)average variable costs
D)​the market price

Quizplus · Accepted Answer

The correct transfer price in this scenario would be the market price. This is because if similar products can be bought externally, the market price would determine the price at which the intermediate good can be bought and sold. Choosing any of the other options such as average costs or fixed costs would not accurately reflect the market value of the intermediate good.

​If Products Similar to the Intermediate Good Can Be Bought

If Products Similar to the Intermediate Good Can Be Bought