The Transfer Price of an Upstream Product Should Always Equal

Multiple Choice

The transfer price of an upstream product should always equal the market price when:

A) there is an outside market for the upstream product.
B) the price elasticity of demand for the upstream product is greater than 1 (in absolute value) .
C) there is a perfectly competitive market for the downstream product.
D) the marginal cost of the downstream product is greater than 1.
E) the firm is a monopolist in its downstream market.