All of the Following Are Potential Advantages to Initiating, Continuing

question 25

Multiple Choice

All of the following are potential advantages to initiating, continuing, and/or expanding international operations EXCEPT

• A) Firms can gain new customers for their products.
• B) Foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets.
• C) Foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials and/or cheap labor.
• D) Foreign operations could be seized by nationalistic factions.
• E) Foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment.

Understand the relationship between isocost lines and isoquants in optimizing production.

Identify the factors that cause shifts in isocost lines.

Understand how to interpret isocost lines in relation to the firm's costs of capital and labor.

Grasp the concept of optimal combination of capital and labor for a firm.

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Definitions:

Factory Overhead Rate

A calculation used to allocate all indirect manufacturing costs to produced goods.

Multiple Production Department Factory Overhead Rate

A method to allocate factory overhead costs to multiple production departments based on specific measures such as labor hours or machine hours.

Fabrication Department

A specialized division within a company where raw materials are converted into components or products through various processes.

Assembly Department

A segment within a manufacturing facility where components are assembled into final products or where significant assembly work takes place.