Which of the Following Observations Concerning Knickerbocker's Theory Is True

question 41

Multiple Choice

Which of the following observations concerning Knickerbocker's theory is true?

• A) It does not explain imitative FDI behavior by firms in oligopolistic industries.
• B) Economists favor this theory as an explanation for FDI compared to the internalization theory.
• C) It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad.
• D) It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

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Definitions:

Equity Profits

Profits that result from an investor's share in the earnings of an equity-accounted investee, reflecting the investor's ownership interest in the investee.

Dividend Revenue

Income earned from owning shares in a company that pays dividends out of its profits to shareholders.

Investment Carrying Amount

The value at which an investment is recognized in the balance sheet after deducting any impairment or amortization.

Markup

The difference between the cost of a good or service and its selling price, expressed as a percentage over the cost.