Why Does Transfer Pricing Become Especially Complex When the Global

question 9

Multiple Choice

Why does transfer pricing become especially complex when the global market is involved?

• A) A global firm can use transfer pricing as a tax-avoidance device and governments dislike such activities.
• B) Issues of quality control can be serious, even when divisions of the same firm are involved.
• C) Shipping materials across national lines involves payment of duties and taxes, and these become part of the total price of the goods.
• D) The temperature and humidity differences between origins and destinations often damage the products.

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Definitions:

Macroeconomy

The sector of economics study that deals with the performance, structure, and behavior of an economy as a whole, focusing on economy-wide phenomena.

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The process by which a nation's wealth increases over time, typically measured by the rise in its gross domestic product (GDP).

Microeconomics

The branch of economics that focuses on the actions of individuals and industries, rather than the economy as a whole.

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A branch of economics that focuses on describing economic phenomena, without making judgments or recommendations.