Which of the Following Is True About Direct Investment as a Mode

question 56

Multiple Choice

Which of the following is True about direct investment as a mode of international expansion?

• A) It allows a firm to retain full control over its investment.
• B) It yields the lower returns than joint ventures.
• C) It involves the least amount of risk.
• D) It involves the least cost.
• E) It does not allow the firm to diversify.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with increasing scale.

Long-Run Average Cost Curve

A graphical representation that shows the lowest average cost at which a firm can produce any given level of output in the long run, when all inputs are variable.

Small Firms

Businesses that operate on a smaller scale than larger enterprises, often characterized by fewer employees and lower income or revenue.

Large Firms

Enterprises or corporations that operate on a large scale, typically having significant market power, resources, and complex organizational structures.