Exam 9: International Factor Movements and Multinational Enterprises

As workers migrate from low-wage Mexico to high-wage United States,wages tend to rise in Mexico and fall in the United States.

Are there any differences between the theory of multinational enterprises and conventional trade theory?

Foreign direct investment would occur if Microsoft Inc.of the United States purchased securities of the French government.

The migration of workers from Mexico to the United States tends to exert downward pressure on the wages of native U.S.workers that compete against Mexican workers for jobs.

The theory of multinational enterprise is totally inconsistent with the principle of comparative advantage.

Which term best describes the New United Motor Manufacturing Co.?

There is virtually universal agreement among economists that foreign direct investment in the United States has reduced the economic welfare of the average U.S.citizen.

What are the typical ways in which multinational enterprises have diversified their operations?

Foreign-owned companies in the United States operate under more strict antitrust,environmental,and other regulations than U.S.-owned companies.

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

What are Mexican maquiladoras?

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 S? and consists entirely of native U.S. workers. The demand schedule of labor is denoted by D?. Figure 9.2. U.S. Labor Market -Consider Figure 9.2.If Mexican migration to the United States results in the labor force increasing to 3 workers,denoted by schedule S?,the:

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.

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, MC?=AC?. Figure 9.1. International Joint Venture -Consider Figure 9.1.Compared to the market equilibrium position achieved by Sony Company and American Company as competitors,Venture Company as a monopoly leads to a deadweight loss of consumer surplus of:

In recent years,the largest amount of U.S.direct investment abroad has occurred in:

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, MC?=AC?. Figure 9.1. International Joint Venture -Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC?=AC?,which result from changes in work rules by Venture Company employees that led to higher worker productivity.The net effect of Venture Company's formation on the welfare of the domestic economy is:

Maquiladoras refer to an assemblage of U.S.-owned companies that combine Mexican parts and U.S.assembly to manufacture goods that are exported to Mexico.

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, MC?=AC?. Figure 9.1. International Joint Venture -Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC?=AC?,which result from wage concessions accepted by Venture Company employees.The net effect of Venture Company's formation on the welfare of the domestic economy is:

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

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