The Difference Between Internalization Theory and Imitative Theory Is That

question 52

Multiple Choice

The difference between internalization theory and imitative theory is that

• A)internalization theory does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.
• B)imitative theory addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad.
• C)most economists favor imitative theory as an explanation for FDI.
• D)no important aspect of FDI is explained by imitative theory.
• E)internalization theory addresses the issue of efficiency of FDI over exporting or licensing.

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Definitions:

Average Cost

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items.

Cost Flow Assumption

An accounting principle that determines the method used to assign costs to inventory and to cost of goods sold, including FIFO, LIFO, and average cost methods.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company. This includes the cost of materials and direct labor.

LIFO Liquidation

The process of selling older inventory items purchased at lower costs, which can lead to an artificially higher reported profit due to inflation.