When Determining the Functional Currency

question 48

Multiple Choice

When determining the functional currency,

• A)if the sales prices for the foreign entity's products are generally not responsive on a short-term basis to exchange rate changes,but are determined more by local competition and government regulation,the local currency should be the functional currency.
• B)if there is an active local market for the foreign entity's products the local currency should be the functional currency.
• C)if factor of production costs for the foreign entity are primarily,and on a continuing basis,costs for components obtained from the parent's country the function currency should be the home currency.
• D)all of the options

Explain the diamond-water paradox and the importance of marginal utility in determining price.

Analyze the impact of external factors (e.g., pricing strategies, technological advancements) on consumer preferences and demand.

Understand the concept of job enrichment and its implications for job design.

Identify the key characteristics of jobs that contribute to job satisfaction and motivation.

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Definitions:

Excise Tax

A tax levied on the production of a specific product or on the quantity of the product purchased.

Tax Revenues

The income that is gained by governments through taxation, an important source of revenue for government expenditures.

Inelastic Demand

A situation in which the demand for a product does not significantly change with a change in its price.

Price-Elastic

Refers to the degree to which the demand for a product changes in response to a change in its price.