According to Knickerbocker's Theory

question 55

Multiple Choice

According to Knickerbocker's theory

• A) when a firm has valuable know-how that cannot be adequately protected by a licensing contract, it engages in FDI.
• B) when a firm's skills and know-how are not amenable to licensing, it usually prefers the FDI route.
• C) by placing tariffs on imported goods, governments indirectly increase the cost of exporting relative to foreign direct investment and licensing.
• D) when a firm that is part of an oligopolistic industry expands into a foreign market, other firms in the industry will be compelled to make similar investments.

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Definitions:

Manufacturing Overhead Applied

The allocation of estimated manufacturing overhead costs to individual products or job orders based on a predetermined overhead rate.

Sales Salaries Expense

The total cost incurred for salaries, wages, and commissions paid to sales personnel, reflecting a company's investment in its sales force.

Work in Process

Inventory consisting of items that are in the process of being produced but are not yet finished goods.

Direct Materials Cost

The cost of raw materials directly used in the production of goods, easily traceable to the final product.