10 Questions
Which of the following is a consequence of consumers boycotting a multinational corporation (MNC)?
Consumers' income levels will decrease, thus decreasing consumption.
A microeconomic perspective focuses on ____ forces such as economic conditions that can affect the value of an MNC.
external
If an MNC has a subsidiary in Italy that exports its products to various European countries that use the Euro as their currency, the MNC is not subject to exchange rate risk.
False
Compared to other methods of international business, international trade generally results in ____ exposure to international political risk and ____ exposure to international economic conditions.
lower; lower
Which method of international business is most appropriate for Boca Co. to expand its business to Japan and maintain complete control over the operations?
Licensing
A decentralized management style of an MNC results in relatively ____ agency costs.
high
Which of the following is a method of international business that allows an MNC to have complete control over its operations in a foreign country?
Establishment of a subsidiary
Compared to other methods of international business, international trade generally results in ____ exposure to international political risk.
lower
Which of the following is a consequence of consumers boycotting an MNC's products?
The MNC will face decreased demand for its products.
Which of the following is a characteristic of a decentralized management style in an MNC?
High agency costs
Test your knowledge of international trade theories with this quiz. Questions cover topics like Imperfect Markets Theory, Product Cycle Theory, and licensing in foreign markets.
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