When a Developing Country Relies on Export Promotion

question 57

Multiple Choice

When a developing country relies on export promotion,

• A)it concentrates on producing for its domestic market
• B)it builds its technological and educational base and then can make more complex products for export
• C)domestic producers have sufficient protection that they can afford to become inefficient
• D)its government must intervene more in markets
• E)None of the answers is correct

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Definitions:

Unit Contribution Margin

The amount each unit sold contributes towards covering fixed costs and generating profit, calculated as the selling price per unit minus the variable cost per unit.

Operating Income

Earnings before interest and taxes (EBIT), measuring a company's profit from its operational and regular business activities.

Fixed Costs

Expenses that do not change in relation to the volume of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of the relative mix of a business’s variable costs and fixed costs, computed as contribution margin divided by operating income.