Exam 9: International Factor Movements and Multinational Enterprises

Immigration tends to reduce the incomes of all factors of production.

A U.S.firm is deciding on whether or not to build a production facility in Tunisia.All else equal, if Tunisia has very little corruption, it therefore has relatively low

Suppose that there are significant costs associated with coordinating a subsidiary with the parent organization and assessing the market potential of a foreign country.If there are also significant tariffs, in this case ________________is likely to be the lowest-cost method of supplying goods abroad.

According to U.S.tax law, a multinational enterprise headquartered in the United States is allowed credits against its U.S.income tax liabilities in an amount equal to the income taxes it pays to foreign governments.

Multinational enterprises

In recent years, Apple Inc.has triggered controversy through its legal avoidance of U.S.income taxes.

Figure 9.3 Figure 9.3 represents the Mexican 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 Mexican workers. The demand schedule of labor is denoted by DMexico. -Consider Figure 9.3.At labor market equilibrium with supply S₀, _____ workers are hired at a wage rate of ____ pesos per hour, while total labor income equals ____ pesos.

Imagine that the Brazilian aircraft manufacturer Embraer purchases a 10 percent share of a Canadian aircraft distribution company, in order to facilitate the marketing and sales of its aircraft in Canada.This is an example of

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.Suppose that SKG and Timken jointly form a new firm, Venture Company, whose ball bearings replace the output sold by the parents in the domestic market.Assuming that Venture Company operates as a monopoly and that its costs equal MC₀=AC₀, the firm's price, output, and total profit would respectively equal

Who tends to benefit from increased immigration?

The market power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions.Which type of cost reduction would NOT lead to offsetting welfare gains for the overall economy?

Both economic theory and empirical studies support the notion that foreign direct investment is conducted in anticipation of future profits.

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers, which would place their products at a competitive disadvantage in a foreign country.

What are the disadvantages of forming joint ventures?

Critics of multinational corporations maintain that they often abandon domestic workers in order to take advantage of lower wage scales abroad.

In natural-resource-oriented industries, such as oil and copper, joint ventures have often been formed by several companies since the cost of resource extraction may be prohibitively large for a particular company.

In recent years, Canada has virtually closed its borders to foreign workers who desire to migrate to the country.

Which of the following would BEST explain why foreign direct investment might be attracted to the United States?

The ______ refers to the price charged for goods sold to a subsidiary of a multinational enterprise by another subsidiary in another country

Since the 1980s, Japanese auto companies have invested billions of dollars in U.S.based assembly facilities, known as transplants.This investment is explained by all of the following EXCEPT the desire to