Which of the Following Is Conducive to Low Transfer Prices

question 70

Multiple Choice

Which of the following is conducive to low transfer prices from the parent company to a foreign subsidiary and high transfer prices to the parent company from a foreign subsidiary?

• A) political instability
• B) restrictions on profit or dividend remittances
• C) restrictions in the subsidiary country on the value of imported products
• D) desire to mask the profitability of the foreign subsidiary to keep competitors out

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Definitions:

Effort Justification

A phenomenon in which individuals attribute greater value to outcomes they had to put effort into achieving, often to reduce cognitive dissonance.

Ingratiation Theory

A psychological theory that explores how people attempt to make themselves appear more likable to others, often through flattery or other strategic behaviors.

Self-Serving Bias

The tendency to attribute positive outcomes to internal factors and negative ones to external factors, thereby protecting self-esteem.

Peripheral Route

A concept in persuasion that refers to the influence of cues that are not directly related to the message content, such as the attractiveness or credibility of the source.