7. Balanced Tire Company (B). Assume Balanced Tire (previous problem) decided to set the Canadian price at C$65. Both countries, however, have decreased their corporate income tax rates: the U.S. to 35% and Canada to 38%.

a. Given the change in tax rates, what final Canadian dollar price now would maximize the company's consolidated profits?

b. Would reducing the transfer price from C$56 to C$54 increase or decrease consolidated profits?