Which Cost Will Be Minimized by Setting a Low Transfer

question 41

Multiple Choice

Which cost will be minimized by setting a low transfer price?

• A) Withholding taxes on a downstream transfer
• B) Import duties
• C) Currency devaluation of foreign cash flows
• D) All of the above

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Definitions:

Marginal Cost

The variation in overall expenses that occurs with the production of an additional unit.

Total-Cost Curve

A graphical representation showing the total cost of producing different quantities of a good or service.

Marginal Product

The additional output that is gained by employing one more unit of a factor of production.

Average-Variable-Cost Curve

A graphical representation showing how the average variable cost of production changes as the quantity of output is altered.