QUESTION A firm is most likely to favor foreign direct investment over exporting when: A. the firm wants its technological know-how to be widely disseminated. B. the firm wishes to maintain control over its operations and business strategy. C. the transportation costs are low. D. there are no trade barriers. E. the firm wants to […]
QUESTION According to the radical view of FDI, multinational enterprises (MNEs) that already exist in a country should be: A. immediately nationalized. B. made to pay higher taxes. C. converted into publicly traded companies. D. banned from obtaining finance from the financial institutions in the host country. E. immediately privatized. ANSWER A
QUESTION The interdependence between firms in an oligopoly leads to: A. trade wars. B. a decrease in the supply. C. imitative behavior. D. higher demand. E. increased domestic consumption. ANSWER C
QUESTION Which of the following is a reason for the decline in the popularity of the radical view of FDI? A. The rise of communism in Eastern Europe B. The generally steady economic growth of those countries that embraced the radical position C. The growing belief in many countries that FDI leads to loss of […]
QUESTION The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling and buying of the domestic market. Which of the following terms explains the market structure of the cement industry in Erbia? A. Perfect competition B. Monopoly C. Oligopoly D. Dual monopoly E. Monopsony ANSWER C
QUESTION Which view argues that international production should be distributed among countries according to the theory of comparative advantage? A. Conservative B. Pragmatic nationalism C. Free market D. Radical E. Keynesian economic ANSWER C
QUESTION A critical competitive feature of an oligopoly is the: A. lack of interaction among the major players. B. presence of a domestic market which is open for foreign firms. C. desire of all the major players to avoid the phenomenon of diminishing returns. D. interdependence of the major players. E. lack of imitative behavior […]
QUESTION If one firm in an oligopoly cuts prices, then most likely, its competitors will: A. make profits. B. also respond with similar price cuts. C. correspondingly raise prices. D. capture additional market share. E. not be impacted by the price cuts. ANSWER B
QUESTION Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting? A. The presence or threat of trade barriers B. The costs of acquiring a foreign enterprise C. The costs of establishing production facilities in a foreign country D. The risk of giving away valuable technological […]
QUESTION Which of the following products has a low value-to-weight ratio? A. Electronic components B. Personal computers C. Medical equipment D. Computer software E. Cement ANSWER E
