Question

1.

2.

Raven, Inc. has a division that manufactures a component that sells for $195 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of the component is $21. What is the minimum transfer price if the division is operating below its capacity? XA. $195 *B. $45 O C. $66 OD. $21

Answer 1

Q-1 :: ANSWER :: (B) $45

=> Explanation ::

-> Minimum Transfer price = Variable Cost + Opportunity Cost

= $45 + 0

= $45

Q-2 :: ANSWER :: (C) Grant A Patent to A Firm, Making It A Natural Monopoly

=> Explanation ::

Patent Is Right That Granted By Government To Inventor Of Product So That They Control Monopoly And Its Price. So In Exchange Of Patent Inventor Have To disclose Its Technology To public Without Keeping Any Secret so It Convert In natural Monopoly which Require high Cost And Powerful Economic Of Scale To Run The Business So It Provide Genuine Monopoly to the Country.