Even If Production Costs Are Higher in a Foreign Country

question 22

Multiple Choice

Even if production costs are higher in a foreign country, a U.S. MNC may establish a manufacturing plant in the foreign country if the government of that country:

• A) eliminates all quotas.
• B) reduces all quotas.
• C) imposes restrictive quotas.
• D) eliminates all tariffs.

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Definitions:

Stockholders' Equity

The portion of a company's assets that belongs to the shareholders, calculated as the difference between total assets and liabilities.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership of a portion of a company.

Dividends Declared

The amount of earnings a company decides to distribute to its shareholders as measured at a specific point in time.