Exam 9: International Factor Movements and Multinational Enterprises

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.

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

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. Figure 9.2. U.S. Labor Market -Consider Figure 9.2. As the result of the Mexican migration to the United States:

Multinational enterprises face problems since they:

Figure 9.1 illustrates the market conditions facing Sony Company and American Company 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. At the equilibrium price, domestic households attain ____ of consumer surplus:

A joint venture leads to increases in national welfare if the cost-reduction effect is due to wage concessions and if it more than offsets the market-power effect.

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

Most multinational corporations have a low ratio of foreign sales to total sales, usually 5 percent or less.

Figure 9.1 illustrates the market conditions facing Sony Company and American Company 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. With Sony Company and American Company behaving as competitors, the equilibrium price and output respectively equal:

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

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. Figure 9.2. U.S. Labor Market -Consider Figure 9.2, at labor market equilibrium, _____ workers are hired at a wage rate of $____ per hour, while total wages equal ____.

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.

Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles. This practice is referred to as:

Developing countries have sometimes feared open immigration policies of developed countries on the grounds that highly educated and skilled people may emigrate to the developed countries, thus limiting the growth potential of the developing countries.

Mergers differ from joint ventures in that they involve the creation of a new business firm, rather than the union of two existing companies.

Both Coca-Cola Co. and Pepsi-Cola Co. are multinational firms in that their soft drinks are bottled throughout the world. This practice illustrates:

Multinational enterprises:

Conglomerate integration would occur if General Motors Inc. of the United States acquired a controlling interest in a British chemical company.

Foreign direct investment would occur if Mobile Inc. of the United States acquired sufficient common stock in a foreign oil company to assume voting control.

Which of the following refers to the price charged for products sold to a subsidiary of a multinational enterprise by another subsidiary in another nation?