Assume that a multinational company produces components in country A and ships them to a subsidiary in country B. In order to increase its profits
A) the company should charge a high transfer price for the components if income taxes in country B are higher than in country A.
B) the company should charge a low transfer price for the components if income taxes in country B are higher than in country A.
C) the company should charge a high transfer price for the components if income taxes in country A are higher than in country B.
D) None of the above
A
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The annual insurance premiums for Michael’s Machine Shop have permanently risen because of a recent series of thefts by employees, but there is no change in the premiums paid by Michael's competitors. If machine shops are a competitive constant-cost industry, then in the long run
a. Michael's profit will fall to zero. b. Michael's Machine Shop will be driven out of business. c. the higher fixed costs will have no effect on Michael's pricing and production decisions. d. the demand for service from Michael’s Machine Shop will fall.
Why are firms in monopolistic competition unable to make an economic profit in the long run?
What will be an ideal response?
Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself through hunting, fishing, and farming. Which of the following statements about Forest is true?
A. Forest doesn't have to consider costs and benefits. B. Forest has to make trade-offs. C. Forest has unlimited resources. D. Forest is not required to make trade-offs because he is self-sufficient.
Suppose you decide to move $2000 from your checking account and move it to your savings account. What is the overall effect on M1 and M2?
A. M1 is unchanged, M2 falls by $2000. B. M1 declines by $2000, M2 is unchanged. C. M1 declines by $2000, M2 rises by $2000. D. M1 is unchanged, M2 is unchanged.