1、test bank 8CHAPTER 9INTERNATIONAL FACTOR MOVEMENTS ANDMULTINATIONAL ENTERPRISESMULTIPLE-CHOICE QUESTIONS 1. “Risk spreading” is a motive most likely to be served when firms undergo:a. Horizontal integrationb. Vertical integrationc. Conglomerate integrationd. None of the above 2. The source (home) lo
2、cation of most of the worlds leading multinational enterprises is:a. North America and Europeb. North America and Asiac. Europe and South Americad. Europe and Asia 3. Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate good
3、s going into the production of finished goods?a. Forward vertical integrationb. Backward vertical integrationc. Forward horizontal integrationd. Backward horizontal integration 4. Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles. This practi
4、ce is referred to as:a. Forward vertical integrationb. Forward conglomerate integrationc. Backward vertical integrationd. Backward conglomerate integration 5. Suppose that a steel manufacturer headquartered in Japan sets up a subsidiary in Canada to produce steel. This practice is referred to as:a.
5、Conglomerate integrationb. Forward vertical integrationc. Backward vertical integrationd. Horizontal integration 6. During the 1970s, American oil companies acquired nonenergy companies (e.g., copper, auto components) in response to anticipated decreases in investment opportunities in oil. This type
6、 of diversification is referred to as:a. Horizontal integrationb. Conglomerate integrationc. Forward vertical integrationd. Backward vertical integration 7. Which of the following best refers to the outright construction or purchase abroad of productive facilities, such as manufacturing plants, by d
7、omestic residents?a. Direct investmentb. Portfolio investmentc. Short-term capital investmentd. Long-term capital investment 8. In recent years, the largest amount of U.S. direct investment abroad has occurred in:a. Central Americab. South Americac. Europed. Japan 9. In recent years, most foreign di
8、rect investment in the United States has come from:a. Western Europeb. Central Americac. South Americad. Asia 10. Most U.S. direct investment abroad occurs in:a. Communicationsb. Petroleumc. Finance and insuranced. Manufacturing 11. Most foreign direct investment in the United States occurs in:a. Pu
9、blic utilitiesb. Communicationsc. Manufacturingd. Mining and smelting 12. Which of the following is not a significant motive for the formation of multinational enterprises?a. Avoiding tariffs by obtaining foreign manufacturing facilitiesb. Obtaining the benefits from overseas comparative advantagesc
10、. The acquisition of natural resource supply sourcesd. Subsidies granted by the home government to overseas corporations 13. Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is best ref
11、erred to as:a. International dumpingb. Cost-plus pricingc. Transfer pricingd. Technological transfer 14. Multinational enterprises may provide benefits to their source (home) countries because they may:a. Secure raw materials for the source countryb. Shift source country technology overseas via lice
12、nsingc. Export products which reflect source-country comparative disadvantaged. Result in lower wages for source-country workers 15. Trade analysis involving multinational enterprises differs from our conventional trade analysis in that multinational enterprise analysis emphasizes:a. Absolute cost d
13、ifferentials rather than comparative cost differentialsb. The international movement of factor inputs rather than finished goodsc. Purely competitive markets rather than imperfectly competitive marketsd. Portfolio investments rather than direct foreign investments 16. Direct foreign investment has t
14、aken all of the following forms except:a. Investors buying bonds of an existing firm overseasb. The creation of a wholly owned business enterprise overseasc. The takeover of an existing company overseasd. The construction of a manufacturing plant overseas 17. Which of the following would best explai
15、n why foreign direct investment might be attracted to the United States?a. U.S. price ceilings that hold down the price of energyb. U.S. wage rates exceeding the productivity of U.S. laborc. Artificially high prices being charged for the stock of U.S. firmsd. Anticipations of future reductions in U.
16、S. tariff levels 18. Both Coca-Cola Co. and Pepsi-Cola Co. are multinational firms in that their soft drinks are bottled throughout the world. This practice illustrates:a. Backward vertical integrationb. Forward vertical integrationc. Horizontal integrationd. Conglomerate integration 19. The market
17、power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions. Which type of cost reduction would not lead to offsetting welfare gains for the overall economy?a. R&D generating improved technologyb. Development of more productive
18、machineryc. New work rules promoting worker efficiencyd. Lower wages extracted from workers 20. All of the following are potential advantages of an international joint venture except:a. Sharing research and development costs among corporationsb. Forestalling protectionism against importsc. Establish
19、ing work rules promoting higher labor productivityd. Operating at diseconomy-of-scale output levels 21. Which term best describes the New United Motor Manufacturing Co.?a. Multinational enterpriseb. International joint venturec. Multilateral contractd. International commodity agreement 22. Multinati
20、onal enterprises:a. Increase the transfer of technology between nationsb. Make it harder for nations to foster activities of comparative advantagec. Always enjoy political harmony in nations where their subsidiaries operated. Require governmental subsidies in order to conduct worldwide operations 23
21、. Firms undertake multinational operations in order to:a. Hire low-wage workersb. Manufacture in nations they have difficulty exporting toc. Obtain necessary factor inputsd. All of the above 24. Multinational enterprises face problems since they:a. Cannot benefit from the advantages of comparative a
22、dvantageb. May raise political problems in countries where their subsidiaries operatec. Can invest only at home, but not overseasd. Can invest only overseas, but not at home 25. American labor unions have recently maintained that U.S. multinational enterprises have been:a. Exporting American jobs by
23、 investing overseasb. Exporting American jobs by keeping investment in the United Statesc. Importing cheap foreign workers by shifting U.S. investment overseasd. Importing cheap foreign workers by keeping U.S. investment at home 26. American labor unions accuse U.S. multinational firms of all of the
24、 following except that such firms:a. Enjoy unfair advantages in taxationb. Export jobs by shifting technology overseasc. Export jobs by shifting investment overseasd. Operate at output levels where scale economies occur 27. Which of the following refers to the price charged for products sold to a su
25、bsidiary of a multinational enterprise by another subsidiary in another nation?a. Transfer pricingb. International dumpingc. Price discriminationd. Full-cost pricing 28. Which business device involves the creation of a new business by two or more companies, often for a limited period of time?a. Mult
26、inational enterpriseb. International joint venturec. Horizontal mergerd. Vertical merger 29. International joint ventures can lead to welfare losses when the newly established firm:a. Adds to the preexistent productive capacityb. Enters markets neither parent could have entered individuallyc. Yields
27、 cost reductions unavailable to parent firmsd. Gives rise to increased amounts of market power 30. Multinational enterprises:a. Always produce primary goodsb. Always produce manufactured goodsc. Produce primary goods or manufactured goodsd. None of the aboveFigure 9.1 illustrates the market conditio
28、ns facing Sony Company and American Company initially operating as competitors in the domestic ball-bearing market. Each firm realizes constant long-run costs, MC0=AC0. Answer the Questions 3137 on the basis of this information.Figure 9.1.International Joint Venture 31. Consider Figure 9.1. With Son
29、y Company and American Company behaving as competitors, the equilibrium price and output respectively equal:a. $4 and 2 unitsb. $4 and 4 unitsc. $6 and 2 unitsd. $6 and 4 units 32. Consider Figure 9.1. At the equilibrium price that was calculated in Question #31, domestic households attain _ of cons
30、umer surplus.a. $4b. $8c. $12d. $16 33. Consider Figure 9.1. Suppose that Sony Company and American Company jointly form a new firm, Venture Company, whose ball bearings replace the output sold by the parents in the domestic market. Assuming that Venture Company operates as a monopoly and that its c
31、osts equal MC0=AC0, the firms price, output, and total profit would respectively equal:a. $6, 2 units, $4b. $4, 2 units, $2c. $6, 4 units, $4d. $4, 4 units, $2 34. Consider Figure 9.1. Compared to the market equilibrium position achieved by Sony Company and American Company as competitors, Venture C
32、ompany as a monopoly leads to a deadweight loss of consumer surplus of:a. $2b. $4c. $6d. $8 35. Consider Figure 9.1. Assume Venture Companys formation yields new cost reductions, indicated by MC1=AC1, which result from technological advances. Realizing that Venture Company results in a deadweight loss of consumer surplus, th
