Purely Domestic Firms Will Be at a Disadvantage to MNEs

question 45

Multiple Choice

Purely domestic firms will be at a disadvantage to MNEs in the event of market disequilibria because

• A)domestic firms lack comparative data from its own sources.
• B)international firms are already so large.
• C)all of the domestic firm's raw materials are imported.
• D)None of the above. Domestic firms are not at a disadvantage.

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Definitions:

International Trade

The exchange of goods and services between countries, which allows for greater variety, competition, and efficiency in markets globally.

Consumer Surplus

The distinction between the price consumers are willing to offer for a good or service and the price they really pay.

Agricultural Subsidies

Agricultural subsidies are financial incentives provided by the government to farmers or agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.

Tariff

A tax imposed on imported goods and services to increase their price and reduce competition with domestic industries.