Knickerbocker's Theory Explains Why the First Firm in an Oligopoly

question 35

True/False

Knickerbocker's theory explains why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

---

Definitions:

Price Elasticity

A measure indicating the extent to which the demand for a merchandise changes following a price adjustment.

Short Run

A period in economics during which at least one input is fixed and cannot be changed by the firm.

Long Run

A period in which all factors of production and costs are variable and companies can enter or exit an industry.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various price levels at a given time.