Exam 9: International Factor Movements and Multinational Enterprises

Joint ventures lead to losses in national welfare when the newly established business adds to pre-existing production capacity and fosters additional competition.

Most U.S.direct investment abroad occurs in:

In the short run,the home country of an MNE will likely experience an employment decline when production is shifted overseas.

Both economic theory and empirical studies support the notion that foreign direct investment is conducted in anticipation of future profits.

-Consider Figure 9.3.Policies that permit Honduran workers to freely migrate to Mexico would likely be resisted by:

Foreign direct investment would occur if Mobile Inc.of the United States acquired sufficient common stock in a foreign oil company to assume voting control.

What are the typical ways in which multinational enterprises have diversified their operations?

Forward vertical integration would occur if a U.S.automobile manufacturer acquired a German subsidiary.

Foreign direct investment typically occurs when

Mergers differ from joint ventures in that they involve the creation of a new business firm,rather than the union of two existing companies.

Figure 9.2.U.S.Labor Market -Consider Figure 9.2.Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by:

A joint venture leads to increases in national welfare if its cost-reduction effect is due to productivity gains and if it more than offsets the market-power effect.

-Consider Figure 9.3,at labor market equilibrium with supply S₀,_____ workers are hired at a wage rate of $____ per hour,while total wages equal ____.

Horizontal integration would occur if General Motors sets up a subsidiary in Mexico to produce automobiles identical to those that it produces in the United States.

Most foreign direct investment in the United States occurs in:

All of the following are potential advantages of an international joint venture except: