Which of the Following Is True of a Foreign Subsidiary

question 42

Multiple Choice

Which of the following is true of a foreign subsidiary?

• A) A foreign subsidiary has fewer formalities in its creation and operation.
• B) A foreign subsidiary allows the parent company to have greater control.
• C) A foreign subsidiary is one of the cost-effective ways to expand business in foreign markets.
• D) A foreign subsidiary must be a national of the host country.
• E) A foreign subsidiary is a risk-free alternative that most corporations adopt for global expansion.

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Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, within an economy.

Inelastic

A situation in which the demand or supply for a good or service is relatively unresponsive to changes in price.

Deadweight Loss

A decline in economic effectiveness that happens when a good or service does not reach or cannot reach market equilibrium.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the goods' sensitivity to price changes.