Question 1

Exxon Oil Co. would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Accepted Answer

The answer of Exxon Oil Co. would undertake forward vertical...

Question 2

Vertical integration occurs if a parent multinational corporation establishes foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

Accepted Answer

Vertical integration involves owning and controlling different stages of the supply chain, which can include establishing subsidiaries to produce intermediate goods or inputs.

Question 3

International trade in goods and services and flows of productive factors are substitutes for each other.

Accepted Answer

The answer of International trade in goods and services and...

Question 4

Most multinational corporations have a low ratio of foreign sales to total sales, usually 5 percent or less.

Accepted Answer

According to various sources, the statement is false. Many multinational corporations have a high ratio of foreign sales to total sales, often well above 5 percent.

Question 5

Figure 9.3 Figure 9.3 represents the Mexican labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by SS1U1B10S1U1B0 and consists entirely of native Mexican workers. The demand schedule of labor is denoted by DS1U1B1MexicoS1U1B0.
 
-Consider Figure 9.3. Policies that permit Honduran workers to freely migrate to Mexico would likely be resisted by:

Accepted Answer

Native Mexican workers would likely resist policies that permit Honduran workers to freely migrate to Mexico because the increased supply of labor would lead to a decrease in wages for native Mexican workers. Mexican capital owners, on the other hand, may benefit from the lower wages resulting from the increased labor supply. Therefore, the correct answer is B, as only native Mexican workers would resist such policies.

Question 6

Figure 9.3 Figure 9.3 represents the Mexican labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by SS1U1B10S1U1B0 and consists entirely of native Mexican workers. The demand schedule of labor is denoted by DS1U1B1MexicoS1U1B0. -Consider Figure 9.3. If Honduran migration to Mexico results in the labor force increasing to 12 workers, denoted by schedule S₁, the:

Accepted Answer

The answer of Figure 9.3 Figure 9.3 represents the Mexican...

Question 7

Figure 9.3 Figure 9.3 represents the Mexican labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by SS1U1B10S1U1B0 and consists entirely of native Mexican workers. The demand schedule of labor is denoted by DS1U1B1MexicoS1U1B0. -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 ____.

Accepted Answer

The answer of Figure 9.3 Figure 9.3 represents the Mexican...

Question 8

"Guest worker" programs generally result in temporary migration of workers from:

Accepted Answer

Guest worker programs typically involve workers from impoverished nations being allowed to temporarily migrate to wealthier nations to fill labor shortages. This is because wealthier nations often have industries that require a significant amount of low-skilled labor, and are unable to fully fulfill these needs with their own citizens. Additionally, workers from impoverished nations are often willing to accept lower wages than workers from wealthier nations, making them more attractive to employers in these industries.

Question 9

Most vertical foreign investment, as implemented by multinational corporations, is "forward" in nature rather than "backward."

Accepted Answer

Most vertical foreign investment by multinational corporations is "backward" in nature, meaning it is primarily focused on accessing raw materials or inputs for their production processes, rather than "forward" investments which would involve investing in distribution or sales operations in foreign markets.

Question 10

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disadvantage in a foreign country.

Accepted Answer

This statement is true as multinational corporations may choose to establish manufacturing subsidiaries in countries with lower tariffs to avoid higher costs and maintain a competitive edge in foreign markets.

Question 11

Joint ventures may lead to

Accepted Answer

Joint ventures can lead to various outcomes depending on the specific circumstances, such as the market structure, the bargaining power of the joint venture partners, and the nature of the product or service involved. In some cases, joint ventures may increase welfare by enabling the partners to share risks and costs, access complementary resources and skills, and achieve economies of scale or scope. In other cases, joint ventures may reduce welfare by leading to collusion, foreclosure of competitors, or inefficient outcomes due to the partners' conflicting interests. Therefore, it is possible for joint ventures to lead to both welfare increases and decreases, as well as no significant changes in welfare, depending on the specific factors at play.

Question 12

Foreign direct investment typically occurs when

Accepted Answer

Foreign direct investment refers to investment made by one company into another company located outside the investor's country of origin. It typically occurs when the earnings of the parent company are invested in plant expansion overseas. This can include the construction of new facilities, the purchase of equipment or the acquisition of an existing company. It is a long-term investment that involves a significant commitment of resources and is designed to establish a lasting presence in the country where the investment is made.

Question 13

Figure 9.3 Figure 9.3 represents the Mexican labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by SS1U1B10S1U1B0 and consists entirely of native Mexican workers. The demand schedule of labor is denoted by DS1U1B1MexicoS1U1B0.
 
-Consider Figure 9.3. At labor market equilibrium, the payment to Mexican capital owners equals:

Accepted Answer

The answer of Figure 9.3 Figure 9.3 represents the Mexican...

Question 14

Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by SS1U1B10S1U1B0 and consists entirely of native U.S. workers. The demand schedule of labor is denoted by DS1U1B10S1U1B0.
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:

Accepted Answer

Native U.S. workers would likely resist policies that permit Mexican workers to freely migrate to the United States because this would increase the supply of labor and potentially decrease wages for native workers. U.S. capital owners may benefit from the lower labor costs, so they may not resist such policies.

Question 15

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.

Accepted Answer

Horizontal integration involves a company expanding its operations within the same industry and at the same stage of production. In this case, General Motors is expanding its production of automobiles into Mexico, which is the same industry and same stage of production as its current operations in the United States.

Question 16

Critics of U.S. trade and immigration policy maintain that

Accepted Answer

Critics of U.S. trade and immigration policy argue that it has depressed wages for many Americans, increased the supply of less educated workers in the United States, and adversely impacted the employment opportunities of less-skilled, American workers. These policies have led to a competition for jobs and a decrease in job security that negatively affects American workers.

Question 17

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

Accepted Answer

Brain drain refers to the migration of highly educated and skilled people from poor developing countries to wealthy industrial countries. This phenomenon leads to a loss of expertise and talent in the home country, which can hinder economic growth and development.

Question 18

American critics of U.S. multinational enterprises contend that they promote

Accepted Answer

Critics of U.S. multinational enterprises argue that these firms promote runaway jobs by outsourcing work to foreign countries, which leads to job losses in the United States. They also argue that these firms transfer technology abroad, which could mean potential loss of U.S. technological advantages. Finally, they contend that some multinational enterprises engage in tax evasion by shifting profits to countries with lower tax rates. Therefore, all the options - runaway jobs, technology transfers abroad, and tax evasion - are correct.

Question 19

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

Accepted Answer

The question does not relate to the information presented in Figure 9.3 or the Mexican labor market. It is a separate question about vertical integration and the nationality of the subsidiary being acquired. The correct answer is false, as vertical integration would only occur if the subsidiary involved in the acquisition was involved in the same industry or supply chain as the acquiring company. Nationality alone does not determine whether an acquisition would constitute vertical integration.

Question 20

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.

Accepted Answer

Maquiladoras are factories located in Mexico that import materials and equipment on a duty-free and tariff-free basis for assembly, manufacturing, or processing, and then re-export the assembled product back to the country of origin or to a third country. Maquiladoras are also known as "twin plants" or maquilas. They are a type of manufacturing system that is used mainly by multinational corporations to take advantage of lower wages in Mexico and the proximity to the American market.

Quiz 9: International Factor Movements and Multinational Enterprises

Exxon Oil Co. would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Vertical integration occurs if a parent multinational corporation establishes foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

International trade in goods and services and flows of productive factors are substitutes for each other.

Most multinational corporations have a low ratio of foreign sales to total sales, usually 5 percent or less.

"Guest worker" programs generally result in temporary migration of workers from:

Most vertical foreign investment, as implemented by multinational corporations, is "forward" in nature rather than "backward."

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disadvantage in a foreign country.

Joint ventures may lead to

Foreign direct investment typically occurs when

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.

Critics of U.S. trade and immigration policy maintain that

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

American critics of U.S. multinational enterprises contend that they promote

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

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.