Author Question: MNEs most likely engage in transfer pricing for which of the following reasons? A) Managers want ... (Read 159 times)

rayancarla1 · **on:** Jul 7, 2018

MNEs most likely engage in transfer pricing for which of the following reasons?

A) Managers want to maintain a steady stream of foreign-earned income in countries with strong currencies.
B) Firms want to generate additional sales by charging low prices to developing countries and high prices to advanced economies.
C) Management wants to maximize profitability by moving profits from a nation with high corporate taxes to one with low corporate taxes.
D) Firms want to maximize expenditures in countries with weak economies and shift the savings to advertising and transportation costs.

Question 2

Which of the following is a primary cause of gray market activity?

A) a firm's inability to control production and distribution costs
B) a significant difference in price between national distributors
C) a firm's decision to flood the market with substandard products
D) a large price difference between two countries for the same product