If a firm has a marketing division and a production division with increasing costs, and a...
If a firm has a marketing division and a production division with increasing costs, and a competitive external market for the production division’s output exists, then the marketing division should always buy:
a. all the production division can produce at the external price.
b. only externally.
c. what it wants at the external market price, first from whatever the production division wishes to sell and then, if necessary, externally.
d. from the production division at production’s price.
e. all it wants at the external market price from the production division.
Homework Answers
Solution: what it wants at the external market price, first from whatever the production division wishes to sell and then, if necessary, externally
Explanation: External market price refers to the base rate of pay being offered by the competitors of client's for a few specific jobs performing essential functions and similar roles. When there is an increasing cost of a production division and there exists a competitive external market for the division in production the marketing division would prefer to buy at external market pricing, initially from whatever the division of production wants to sell, and afterwards if required externally
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