Suppose General Electric charges its Mexican subsidiary $500,000 for manufacturing equipment that could be purchased in the open market for $300,000.This practice is best referred to as

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Transfer pricing is the practice of setting prices for goods or services sold between subsidiaries or divisions within the same company. In this case, General Electric is charging its Mexican subsidiary an inflated price for the manufacturing equipment, which may benefit the overall profits of the company but may not be in the best interest of the subsidiary. Price gouging refers to charging excessively high prices during times of high demand, export subsidy refers to a government payment to encourage the export of goods and services, and predatory pricing refers to setting prices low to drive competitors out of business.

Suppose General Electric Charges Its Mexican Subsidiary $500,000 for Manufacturing