To Enter Markets Where Superior Profits Are Possible, an MNC

question 36

Multiple Choice

To enter markets where superior profits are possible, an MNC should:

• A)acquire a competitor that has controlled its local market.
• B)establish a subsidiary or acquire a competitor in a new market.
• C)establish a subsidiary in a market where tougher trade restrictions will adversely affect the firm's export volume.
• D)establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based.

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Definitions:

Free-Rider Problem

A situation where individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production, benefiting from a good without properly paying for it.

Street Performers

Individuals who entertain the public in outdoor locations, often relying on voluntary donations for income.

Median Voter

A theoretical concept that represents the individual whose preferences are exactly in the middle of the set of all voters' preferences, often used in political science to predict the outcome of elections.

Median-Voter Model

A theoretical model suggesting that the preferred policy of the median voter will win the support of a majority in a democratic election, shaping political outcomes.