When a Multinational Corporation Controls the Raw Material Used in the Production

question 9

Multiple Choice

When a multinational corporation controls the raw material used in the production of its final good through a vertical integration,which of the following is most likely to happen?

• A)The MNC will obtain an uninterrupted supply of the raw material at the lowest possible cost.
• B)Consumers will pay lower prices for the good.
• C)The MNC will face anti-trust charges for owning firms that produce both the raw material and the final good.
• D)Consumers will pay higher prices for the good.

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Definitions:

Short-Term Investments

Financial assets that are expected to be converted into cash or sold within a year, such as stocks or bonds.

Long-Term Investments

Assets intended to be held for more than one year, including stocks, bonds, or real estate, to generate revenue or appreciate in value.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically involving regular interest payments and the return of the original investment at maturity.

Stock Investments

Purchasing and holding shares of stock in a company with the expectation of earning a return in the form of dividends, capital gains, or both.