Buzz’s florida division is currently purchasing a part from an outside supplier. the company's georgia division, which has excess capacity, makes and sells this part for external customers at a variable cost of $22 and a selling price of $34. if georgia begins sales to florida, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $4. if sales to outsiders will not be affected, georgia would establish a transfer price of:

answer; risk transference;

answermarginal cost;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.