If a corporation operates two divisions that supply one another, and each division is located in a different country, then transfer prices are:
A. not allowed between most countries.
B. set to allocate profit to the low tax rate country.
C. set to allocate all costs to the low tax rate country.
D. set to allocate profit to the high tax rate country.
Answer: B
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Specialization is the result of:
A) hiring experienced workers. B) paying higher wages to experienced workers. C) workers developing a certain skill set. D) increased demand for a firm's commodity.
The key prediction of the Solow model adapted to include technological change ________ been born out, i.e. with a few exceptions convergence ________ a reality
A) has not, is not B) has not, is C) has, is not D) has, is
According to the monetarists,
a. stable growth in the money supply is needed for economic stability. b. aggregate demand is unstable, mostly because of unstable investment demand. c. there is a need for fiscal policies to stabilize output. d. stable money growth is not needed for the economy to be stable.
When an external cost exists in the production of a good, firms tend to
A) under-produce the good since society pays these costs. B) over-produce the good. C) keep production constant throughout the year. D) under-allocate resources to the production of the good.