Which of the Following Statements Is True of the Home-Country-Based

question 25

Multiple Choice

Which of the following statements is true of the home-country-based approach?

• A) Compensation is adjusted to maintain the expatriate's standard of living in the country where the expatriate is sent from the headquarters.
• B) Compensation is adjusted to maintain the expatriate's standard of living in the country where the MNE is headquartered.
• C) Compensation is adjusted to maintain the expatriate's standard of living in the country that has the lowest cost of living index.
• D) Compensation is adjusted to maintain the expatriate's standard of living in the third country.

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Definitions:

Profit-maximizing Behavior

An economic principle where businesses seek to achieve the highest possible profit from their operations.

Short-run Production Function

The short-run production function describes the relationship between input and output levels when at least one input (like capital) is fixed and cannot be changed immediately.

Variable Factor

An input in the production process that can be changed in the short term to influence output.

Fixed Factors

Inputs in the production process that cannot be easily increased or decreased in the short term, such as machinery or land.