A Firm Maximizes Profits by Charging a Lower Price to Foreign

question 26

Multiple Choice

A firm maximizes profits by charging a lower price to foreign buyers if:

• A)it has a greater monopoly power in the foreign market than it has in its home market.
• B)the foreign demand for its good is more elastic than the domestic demand.
• C)the buyers in the home country have access to cheaper imports from the rest of the world.
• D)the size of the foreign market is much larger than the home market.

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Definitions:

Merchandise

Goods that are bought, sold, and traded within a retail or wholesale business environment.

Accounts Receivable

Represents money owed to a business by its customers for goods or services delivered but not yet paid for, usually recoverable within a short period, like 30, 60, or 90 days.

Merchandise

Goods that are bought and sold within the retail industry.

Sales on Account

Transactions where goods or services are sold with the agreement that payment will be made at a later date, creating an account receivable.