Assume That a Multinational Company Produces Components in Country a and Ships

question 50

Multiple Choice

Assume that a multinational company produces components in country A and ships them to a subsidiary in country B.In order to increase its profits

• A)the company should charge a high transfer price for the components if income taxes in country B are higher than in country A.
• B)the company should charge a low transfer price for the components if income taxes in country B are higher than in country A.
• C)the company should charge a high transfer price for the components if income taxes in country A are higher than in country B.
• D)None of the above

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Definitions:

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