You Can Manufacture a Product in the US and Transfer

question 11

Multiple Choice

You can manufacture a product in the US and transfer it to Europe. In the MC = $3 per unit, and the market price in Europe is $5 per unit. Should you manufacture the unit or not?

• A) Yes, the total net gain is $5 from selling in Europe.
• B) No, MC of $3 has to be forgone.
• C) No, the net receipt of $3 is the same as the MC in the US.
• D) Yes, the net receipts in Europe exceed MC in the US.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Common Stock

A type of security that represents ownership in a corporation and entails voting rights and a share in profits through dividends.

Cumulative

Describing something that increases or accumulates over time, often used in the context of dividends, voting rights, or data accumulation.

Fully Participating

Fully participating describes a type of equity security or preferred stock that has the right to participate in certain additional dividends or distributions beyond a specified amount.