In competitive markets,it is efficient to set the transfer prices ________ to the market price of the intermediate goods.
A)equal
B)below
C)above
D)separate
E)different

Question

Quizplus · Accepted Answer

Setting transfer prices equal to the market price of the intermediate goods ensures that the price reflects the actual cost of production and avoids distortions in the allocation of resources. This also promotes efficiency in the overall market since all parties involved are able to operate at market prices and without any additional costs or benefits.

In Competitive Markets,it Is Efficient to Set the Transfer Prices