The Level of the Transfer Price Can Affect the Overall

question 7

Multiple Choice

The level of the transfer price can affect the overall company because

• A) the higher the transfer price, the higher the operating income.
• B) it may impact on the taxes paid by the multinational company.
• C) the lower the transfer price, the lower the total costs.
• D) internal transfers are always costly to the firm.
• E) the transfer price may be higher than the cost-based price.

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Definitions:

Substitutes

Products or services that can be used in place of one another, where an increase in the price of one leads to an increase in demand for the other.

Good A

A term which might refer to a specific product or item in a hypothetical economic scenario or model, but without more context is not a standard economic term.

Good B

An unspecified product referred to for the sake of example; characteristics or qualities would depend on the context.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price over a specified period of time.