Question 1

Firms undertake multinational operations in order to:

Accepted Answer

A)  Hire low-wage workers 
B)  Manufacture in nations they have difficulty exporting to 
C)  Obtain necessary factor inputs 
D)  All of the above

Question 2

Joint ventures may lead to

Accepted Answer

A)  Welfare increases 
B)  Welfare decreases 
C)  No changes in welfare 
D)  All of the above

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Developing countries, such as Mexico and India, often close their borders to foreign companies unless they are willing to take on partner companies in developing countries.

Accepted Answer

A) True 
 B)False

Question 5

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 SS1U1B10S1U1B0 and consists entirely of native U.S. workers. The demand schedule of labor is denoted by DS1U1B10S1U1B0.
Figure 9.2. U.S. Labor Market
 
-Consider Figure 9.2. Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by:

Accepted Answer

A)  U.S. capital owners 
B)  Native U.S. workers 
C)  U.S. capital owners and native U.S. workers 
D)  Neither U.S. capital owners nor native U.S. workers

Question 6

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.

Accepted Answer

A)  Multinational corporations 
B)  International joint ventures 
C)  Maquiladoras 
D)  Transplants

Question 7

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 SS1U1B10S1U1B0 and consists entirely of native Mexican workers. The demand schedule of labor is denoted by DS1U1B1MexicoS1U1B0.
 
-Consider Figure 9.3. At labor market equilibrium, the payment to Mexican capital owners equals:

Accepted Answer

A)  3 pesos 
B)  6 pesos 
C)  9 pesos 
D)  12 pesos

Question 8

Direct foreign investment has taken all of the following forms $\underline {  \text { except }  }$

Accepted Answer

A)  Investors buying bonds of an existing firm overseas 
B)  The creation of a wholly owned business enterprise overseas 
C)  The takeover of an existing company overseas 
D)  The construction of a manufacturing plant overseas

Question 9

If a joint venture among competing firms is able to cut costs by extracting wage concessions from domestic workers, national welfare increases.

Accepted Answer

A) True 
 B)False

Question 10

All of the following are potential advantages of an international joint venture $\underline { \text { except }   }$

Accepted Answer

A)  Sharing research and development costs among corporations 
B)  Forestalling protectionism against imports 
C)  Establishing work rules promoting higher labor productivity 
D)  Operating at diseconomy-of-scale output levels

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  Multinational enterprise 
B)  International joint venture 
C)  Multilateral contract 
D)  International commodity agreement

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

Accepted Answer

A) True 
 B)False

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is $\underline { \text { best }   }$referred to as:

Accepted Answer

A)  International dumping 
B)  Cost-plus pricing 
C)  Transfer pricing 
D)  Technological transfer

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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, MCS1U1B10S1U1B0=ACS1U1B10S1U1B0.
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:

Accepted Answer

A)  $2 
B)  $4 
C)  $6 
D)  $8

Exam 9: International Factor Movements and Multinational Enterprises

Firms undertake multinational operations in order to:

Joint ventures may lead to

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.

Developing countries, such as Mexico and India, often close their borders to foreign companies unless they are willing to take on partner companies in developing countries.

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.

Direct foreign investment has taken all of the following forms $\underline { \text { except } }$

If a joint venture among competing firms is able to cut costs by extracting wage concessions from domestic workers, national welfare increases.

All of the following are potential advantages of an international joint venture $\underline { \text { except } }$

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

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

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

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

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

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.

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.

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is $\underline { \text { best } }$ referred to as:

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

Exam 9: International Factor Movements and Multinational Enterprises

Firms undertake multinational operations in order to:

Joint ventures may lead to

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.

Developing countries, such as Mexico and India, often close their borders to foreign companies unless they are willing to take on partner companies in developing countries.

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.

Direct foreign investment has taken all of the following forms except ‾\underline { \text { except } } except ​

If a joint venture among competing firms is able to cut costs by extracting wage concessions from domestic workers, national welfare increases.

All of the following are potential advantages of an international joint venture except ‾\underline { \text { except } } except ​

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

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

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

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

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

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.

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.

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is best ‾\underline { \text { best } } best ​ referred to as:

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

Direct foreign investment has taken all of the following forms $\underline { \text { except } }$

All of the following are potential advantages of an international joint venture $\underline { \text { except } }$

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is $\underline { \text { best } }$ referred to as: