Exam 9: International Factor Movements and Multinational Enterprises

The United States has discouraged the "brain drain" problem by permitting the immigration of unskilled workers while restricting the immigration of skilled persons.

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.

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.As the result of the Mexican migration to the United States:

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.Suppose that Sony Company and American Company 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 MC?=AC?,the firm's price,output,and total profit would respectively equal:

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

International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.

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

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.

American critics of U.S.multinational enterprises contend that they promote

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.At the equilibrium price,domestic households attain ____ of consumer surplus:

Most U.S.direct investment abroad occurs in:

Joint ventures lead to national welfare gains if the newly established business yields productivity increases that would have been unavailable if each parent performed the same function separately.

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

Joint ventures lead to losses in national welfare when the newly established business adds to pre-existing production capacity and fosters additional competition.

If the size of the Canadian market is large enough to permit efficient production in Canada,a U.S.firm would profit by establishing a Canadian manufacturing subsidiary or licensing rights to a Canadian firm to manufacture and sell its product in Canada.

Exxon Oil Co.would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

American labor unions have recently maintained that U.S.multinational enterprises have been:

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?

The effect of workers migrating from low-wage Mexico to high-wage United States is to redistribute income from capital to labor in the United States and from labor to capital in Mexico.

Firms undertake multinational operations in order to: