Suppose an MNC Subsidiary Buys 100 Input Units from Its

question 16

Short Answer

Suppose an MNC subsidiary buys 100 input units from its parent at a price of $2 each. It has $300 in additional production costs, and sells its 100 units of output for $6 to the MNC. It pays a 25% local profit tax. The MNC sells the output at home for $8, and its cost of producing inputs is $1. It pays a profit tax of 20% at home on repatriated profits. What is the subsidiary net profit, assume no selling costs at home? What is the MNC's total profit from the operation?

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Definitions:

Visual Cell

A type of cell in the retina that responds to light, aiding in the process of vision.

Opponent Process Theory

A psychological and neurological model that explains how the perception of colors results from opposing responses between two sets of color receptors in the eyes.

Colour Vision

The ability of the visual system to distinguish objects based on the wavelengths (or frequencies) of the light they reflect, emit, or transmit.

Perceptual Set

A psychological predisposition or readiness to perceive certain aspects of available sensory data and ignore others, influenced by expectations, experiences, and context.