The Most Important Concerns Regarding the Costs of FDI for the Home

question 71

Multiple Choice

The most important concerns regarding the costs of FDI for the home country center on the

• A) balance-of-payments and employment effects of outward FDI.
• B) technology capture effect and the perceived loss of national sovereignty.
• C) reverse-resource transfer effect and the exposure to foreign markets caused by FDI.
• D) import of substantial input from abroad and being held to "economic ransom."
• E) exposure to foreign markets and the decreased costs of production.

---

Definitions:

Increasing-Cost Industry

An industry in which production costs increase as output expands, often due to limited resources or rising input costs.

Decline In Demand

A situation where consumers' desire and ability to purchase a product or service decreases, often reflected in lower sales volumes.

Industry Exit

The process of a business ceasing operations in a particular industry, often due to economic factors, competitive pressures, or changes in market demand.

Economic Profits

Earnings that exceed the total costs of production, including both explicit and implicit costs, representing a return above the firm's opportunity costs.