Exam 9: International Factor Movements and Multinational Enterprises

During the 1980s, American oil companies acquired nonenergy companies (e.g., copper, auto components) in response to anticipated decreases in investment opportunities in oil.This type of diversification is referred to as

In the short run, the home country of an MNE will likely experience an employment decline when production is shifted overseas.

Vertical integration occurs if a parent multinational corporation establishes foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S0 and consists entirely of native U.S. workers. The demand schedule of labor is denoted by D0. ? ? -Consider Figure 9.2.Assume that Mexican labor migration yields a new labor supply curve, S₁, which is the combination of domestic labor supply and Mexican labor.As the result of the Mexican migration to the United States

The decision to establish foreign manufacturing operations through direct investment or licensing depends on

Imagine that in 2017, the Ford Motor Company earned $521 million from its production operations in Mexico.Those earnings are then used to expand those same Mexican production operations.This is NOT an example of foreign direct investment.

During the 1980s and 1990s, Japanese auto firms established manufacturing facilities in the United States known as "transplants."

All of the following are potential advantages of an international joint venture EXCEPT

Figure 9.1 illustrates the market conditions facing SKF and Timken, initially operating as competitors in the domestic ball bearing market. Each firm realizes constant long-run costs, MC₀=AC₀. Figure 9.1. International Joint Venture -Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions, indicated by MC₁=AC₁, which result from changes in work rules by Venture Company employees that led to higher worker productivity.Compared to the original competitive equilibrium, the net effect of Venture Company's formation on welfare now is

Most of Toyota's auto plants in the United States are located in

Most vertical foreign investment, as implemented by multinational corporations, is "forward" in nature rather than "backward."

A joint venture along two large competing companies tends to yield a market-power effect, which results in a reduction in consumer surplus that is not offset by a corresponding gain to producers.

Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

International joint ventures can lead to welfare losses when the newly established firm

Firms undertake multinational operations in order to

In recent years, MOST foreign direct investment in the United States has come from

In 2016, three of the world's five largest corporations were based in

Which business device involves the creation of a new business by two or more companies, often for a limited period of time?

Imagine that Microsoft is having difficulty selling laptops in Kenya because of differences in local tastes.It decides to build a subsidiary in Kenya.This is an example of a _______________ motive for foreign direct investment.

Concerning the decision by an American to lend or invest abroad, which of the following countries is generally considered to be the most risky?