Dispersing Particular Value Chain Activities Across Many Countries Rather Than

question 13

Multiple Choice

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when

• A) buyer-related activities (such as sales,advertising,after-sale service and technical assistance)need to take place close to buyers.
• B) high transportation costs make it uneconomical to operate from one or just a few locations.
• C) it helps hedge against the risks of exchange rate fluctuations,supply disruptions,and adverse political developments.
• D) there are diseconomies of scale in trying to operate from a single location.
• E) All of these.

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Definitions:

Noise Traders

Investors who make decisions based on random or irrelevant information, often causing market prices to deviate from their true values.

Limits To Arbitrage

Restrictions or impediments that prevent traders from taking advantage of discrepancies in prices between or within markets to make risk-free profits.

Representativeness Heuristic

The reliance on stereotypes, analogies, or limited samples to form opinions about an entire class.

House Money

A term from Behavioral Finance referring to the tendency of individuals to take greater risks when trading with profits from prior trades, viewing it as "play money."