Firm dfg plans to open a foreign subsidiary through which to sell its manufactured goods in the european market. it must decide between locating the subsidiary in country x or country z. if the subsidiary operates in country x, its gross receipts from sales will be subject to a 3 percent gross receipts tax. if the subsidiary operates in country z, its net profits will be subject to a 42 percent income tax. however, country z's tax law has a special provision to attract foreign investors: no foreign subsidiary is subject to the income tax for the first three years of operations.

answerskimming;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.