Author Question: Assume that a multinational company produces components in country A and ships them to a subsidiary ... (Read 59 times)

karateprodigy · **on:** Jul 1, 2018

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

Question 2

There are 10 identical internet service providers (ISPs) in a city serving a market demand with an elasticity of -1.5. The elasticity of supply for each firm is 3.0. The elasticity of demand faced by an individual ISP is

A) -42.
B) -15.
C) -1.5.
D) -27.