To Exploit Monopolistic Advantages, an MNC Should

question 62

Multiple Choice

To exploit monopolistic advantages, an MNC should:

• A) acquire a competitor that has controlled its local market.
• B) establish a subsidiary or acquire a competitor in a new market.
• C) establish a subsidiary in a market where tougher trade restrictions will adversely affect the firm's export volume.
• D) establish subsidiaries in markets where competitors are unable to produce the identical product.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production activity, such as utilities or raw materials.

Direct Material

Basic substances that are directly used and can be readily identified in the final product.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process or production of goods.

Variable Overhead

Costs that change in proportion to the activity or volume of production, such as utilities or indirect materials.