If Each Division of a Company with a Monopoly Niche

Multiple Choice

If each division of a company with a monopoly niche is allowed to set its transfer price at the profit-maximizing level for the next division as the product flows toward the consumer (assuming no external market for the product) ,then prices will:

A) be higher and profits lower than with non-divisional organization.
B) be lower and profits higher than with a non-divisional organization.
C) be the same and profits will be the same as with a non-divisional organization.
D) match the competitive benchmark and profits will be zero.