The Following Situation Is an Example of an Export Promotion

question 8

True/False

The following situation is an example of an export promotion strategy. Guatemala has a comparative advantage in the production of bananas and, as a result, the Guatemalan government grants incentives to banana growers to improve their performance in the international marketplace.

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Definitions:

Additional Debt

Borrowing more funds in addition to existing debt, which can increase a company's leverage and financial risk.

Operating Capacity

The maximum output that a company can produce under normal conditions within a given period using its existing resources.

Dividend Payout Ratio

A financial metric that shows the percentage of a company's earnings paid out to shareholders as dividends.

Profit Margin

A financial metric measuring the amount of net income generated as a percentage of revenue, indicating the efficiency of a company in converting sales into profits.