The US IRS Allows Transfer Prices to Be Set Using Comparable

question 85

Multiple Choice

The U.S. IRS allows transfer prices to be set using comparable uncontrolled price method. This method is difficult to apply in practice because many factors enter into the pricing of goods and services. Examples include

• A)differences in the terms of sale.
• B)differences in quantity and or quality sold.
• C)differences in location or date of sale.
• D)all of the above

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Definitions:

Marginal External Cost

The cost of producing one additional unit of a good or service that is borne by someone other than the producer or consumer, such as environmental pollution.

Marginal Social Cost

The total cost to society of producing one additional unit of a good, including both private costs and externalities.

Equilibrium Price

The price at which the quantity of a product offered for sale equals the quantity of that product in demand.

Air Cargo

Goods being transported by aircraft, often for commercial purposes or rapid delivery.