Scenario: Blickinstock at the Crossroads

question 169

Multiple Choice

Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin America. To that end, Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary. Keith Moon, Blickinstock's vice president of global business development, will be making a presentation to the board outlining the company's options.
-One board member has asked about the maquiladora industry, which refers to ________.

• A) Mexico's low-cost labor unions
• B) the cross-border drug trafficking problem that threatens to limit legitimate production in Mexico
• C) the low-wage, 130-mile-wide strip along the U.S.-Mexico border
• D) Latin America's new model for business that allows foreign investors to take advantage of government incentives designed to attract foreign direct investment

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Definitions:

Economic Profits

Economic Profits represent the surplus after subtracting both the explicit and implicit costs from total revenue, depicting a firm's advantage beyond the normal returns.

Normal Rate

Typically refers to an average or commonly occurring value within a specific context, such as an interest rate or growth rate.

Marginal Cost

The increase or decrease in the total cost that arises when the quantity produced is incremented by one unit.

Fixed Factor

A resource or input whose quantity cannot easily be changed in the short run.