Rhodia Sells Mining Equipment to Reherbia in Return for Cigars

question 5

Multiple Choice

Rhodia sells mining equipment to Reherbia in return for cigars.This is an example of _____.

• A)countertrade
• B)direct exporting
• C)foreign licensing
• D)international production

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Definitions:

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the actual amount they end up spending.

Reservation Price

The maximum price a consumer is willing to pay for a good or service, beyond which they will choose not to purchase it.

Cost Function

A mathematical formula or equation that describes how production costs change with alterations in the volume of output.

U-shaped Cost Curve

A graphical representation showing that as output increases, average costs initially decrease, reach a minimum, and then increase.