When Considering the Cost of Doing Business in Another Country

question 63

Multiple Choice

When considering the cost of doing business in another country, what would be considered the most attractive market or investment site?

• A) a country that has adopted a closed totalitarian state
• B) a country that has a well-developed body of business contract law
• C) a country with a command-based economic system
• D) a country with stringent product safety laws and huge liability insurance rates
• E) a country which does not provide any protection for property rights

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Definitions:

Contribution Margin

The selling price per unit, minus the variable cost per unit, indicating the contribution towards covering fixed costs and profit.

Business Risk

The potential for loss or failure in a business operation due to factors like market conditions, financial instability, or operational challenges.

Financial Risk

The possibility of losing money on an investment or business venture, including market risk, credit risk, liquidity risk, and operational risk.

Variable Cost Ratio

This is a financial metric that represents the variable costs incurred as a percentage of sales, showing how much of each sales dollar is eaten by variable costs.