Why Do Firms Locate Production Overseas Rather Than Exporting Finished

question 2

Multiple Choice

Why do firms locate production overseas rather than exporting finished goods?

• A)Shipping costs
• B)Firms seek to extend corporate control overseas
• C)Imperfect factor markets
• D)All of the above

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Definitions:

Total Fixed Cost

The sum of all expenses that remain constant regardless of the level of production or output in a business operation.

Average Fixed Cost

the total fixed costs divided by the number of units produced, illustrating how fixed costs dilute with increased production.

Average Variable Cost

The total variable costs of production divided by the number of units produced, representing the variable cost per unit.

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.