Suppose that regardless of the amount of production, a subsidiary's per unit costs are always less than a local firm's.If there are significant tariffs, in this case ________________is likely to be the lowest-cost method of supplying goods abroad.
A) licensing
B) subsidiary production
C) direct exporting
D) vertical integration

Question

Quizplus · Accepted Answer

As per the given scenario where the subsidiary's per unit costs are always less than a local firm's, subsidiary production is likely to be the best choice for supplying goods abroad. This is because significant tariffs would make exporting costly, and licensing or direct exporting may not guarantee control over the production and cost-effective operations as compared to subsidiary production. Thus, setting up a subsidiary production facility would ensure control and cost-effectiveness in supplying goods abroad.

Suppose That Regardless of the Amount of Production, a Subsidiary's