Final answer:
The correct answer is A) Market-based transfer price, which is set based on the competitive market prices and ensures efficient allocation of resources, aligning with the concept that prices should be determined by supply and demand.
Step-by-step explanation:
The correct answer to the question “________ is derived from the price required to be competitive in the global marketplace” is A) Market-based transfer price. This type of pricing strategy uses competitive market prices to determine the price at which goods and services are transferred between divisions within the same company or between affiliated companies. The market-based transfer price aligns with the principle that prices should be neutral and efficient, as they are determined by supply and demand without the need for bureaucracy.
For instance, if the marginal cost to produce a unit is 3.5, and this cost aligns with what would be competitive in the market, then a market-based transfer price would be set at that level. This ensures that resources are allocated efficiently, reflecting the value to consumers which matches the cost of producing the last unit. The market-based transfer price secures a balance, ensuring consumers receive a competitive quantity and price, mirroring a perfectly competitive market outcome.