In the Situation of Transfer Pricing by a Multinational Firm

question 14

Multiple Choice

In the situation of transfer pricing by a multinational firm in its trade between plants located in less developed countries (LDCs) and industrialized countries (ICs) , the firm, other things equal, will, if it wants to shift recorded profits from its LDC plants to its IC plants, record a price on goods sent from LDCs to ICs that is __________ than a comparable free-market price. For goods sent from ICs to the LDCs, the firm will __________ than a comparable free-market price.

• A) lower; also want to record a price that is lower
• B) lower; want to record a price that is higher
• C) higher; want to record a price that is lower
• D) higher; also want to record a price that is higher

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Definitions:

Knowledge Valuation

The process of determining the importance or worth of information, insights, or specific expertise within a particular context.

Competitors

Entities or individuals that are in rivalry for the same objectives or resources, often in a business or athletic context.

Consultants

Professionals who provide expert advice in a particular area, such as business, education, law, regulatory compliance, or marketing.

Social Capital

The intricate links among residents and workers in a given society, which help that society to operate efficiently.