To avoid paying the higher ad valorem tariff to a foreign government,a multinational could set the transfer price for its goods entering the country for sale to an affiliate as ________ as possible.

Question

Quizplus · Accepted Answer

Setting the transfer price for goods entering a foreign country for sale to an affiliate as low as possible will help a multinational avoid paying the higher ad valorem tariff imposed by the foreign government. This is because the tariff is usually calculated as a percentage of the product's declared value, and a lower transfer price will result in a lower declared value and therefore a lower tariff payment. Therefore, option B is the correct answer.

To Avoid Paying the Higher Ad Valorem Tariff to a Foreign