Which of the Following Statements Is NOT True Regarding MNEs

question 51

Multiple Choice

Which of the following statements is NOT true regarding MNEs when compared to purely domestic firms?

• A) MNEs tend to rely more on short and intermediate term debt.
• B) MNEs have greater foreign exchange risk.
• C) MNEs have greater costs of asymmetric information.
• D) MNEs have higher agency costs.

---

Definitions:

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the actual amount they spend on it.

Market Price

The market rate for buying or selling an asset or service in a public trading environment.

Producer Surplus

The gap between the minimum amount sellers are prepared to accept for a product or service and the actual payment they get.

Equilibrium

The point at which the quantity of a product or service demanded by consumers equals the quantity supplied by producers, leading to a stable market condition.