Active Ownership of a Foreign Company or of Overseas Manufacturing

question 22

Multiple Choice

Active ownership of a foreign company or of overseas manufacturing or marketing facilities is called ____________.

• A) direct foreign investment
• B) foreign institutional investment
• C) contract manufacturing
• D) licensing

---

Definitions:

Efficient Scale

The level of production at which a firm's average total costs are minimized.

Monopolistically Competitive

A market structure where many sellers offer products or services that are similar but not perfect substitutes, allowing for some degree of market power.

Product-variety Externality

The impact on consumer welfare or market efficiency due to variety in products available, often seen as a positive externality in markets.

Business-stealing Externality

A negative effect where a new entrant in a market draws customers from existing businesses, potentially harming those businesses without creating new value for the market as a whole.