"Firms Prefer to Acquire Existing Assets Rather Than Undertake Greenfield

question 94

Essay

"Firms prefer to acquire existing assets rather than undertake greenfield investments while contemplating FDI." Explain the reasons that support this argument.

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Definitions:

Total Cost

The complete cost of producing a specific quantity of output, combining both fixed and variable costs.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service, crucial for economic decision-making and pricing strategies.

Diminishing Marginal Product

The principle that as more of a variable input is added to a fixed input, the additional output gained from each new unit of input will eventually decrease.

Marginal Costs

The extra expense associated with manufacturing an additional unit of a product or service.