Final answer:
The intermediate market price does not set a lower limit for internal transfer charges and buyers and sellers may agree to prices different from the equilibrium price due to various subjective or strategic reasons.
Step-by-step explanation:
The statement 'When an intermediate market price for a transferred item exists, it represents a lower limit on the charge that should be made on transfers between divisions' is false. Transfer prices within a company can be set at, above, or below the external market price for various reasons, including strategic decision-making, tax considerations, or to achieve internal goals. Therefore, the intermediate market price doesn't necessarily represent a floor or a lower limit on the transfer charge.
Concerning equilibrium price, it is also false to say 'In the goods market, no buyer would be willing to pay more than the equilibrium price' and 'no seller would be willing to sell for less than the equilibrium price.' Buyers might pay more for a good due to perceived added value, brand preference, or lack of alternatives. Similarly, sellers may accept lower prices to clear inventory, gain market share, or because the item has less value to them, possibly due to a sunk cost.