Even if production costs are higher in a foreign country, a U.S. MNC may establish a manufacturing plant in the foreign country if the government of that country:
A) eliminates all quotas.
B) reduces all quotas.
C) imposes restrictive quotas.
D) eliminates all tariffs.

Question

Quizplus · Accepted Answer

Imposing restrictive quotas can make it more attractive for a U.S. MNC to establish a manufacturing plant in a foreign country because it limits the amount of goods that can be imported into the country, potentially making locally produced goods more competitive despite higher production costs.

Even If Production Costs Are Higher in a Foreign Country