Trade analysis involving multinational enterprises differs from our conventional trade analysis in that multinational enterprise analysis emphasizes:
A) Absolute cost differentials rather than comparative cost differentials
B) The international movement of factor inputs rather than finished goods
C) Purely competitive markets rather than imperfectly competitive markets
D) Portfolio investments rather than direct foreign investments

Question

Quizplus · Accepted Answer

Multinational enterprise analysis emphasizes the international movement of factor inputs, such as capital, labor, and technology, rather than the movement of finished goods. This is because multinational enterprises often have production facilities and operations located in multiple countries, and they may source inputs from different countries to take advantage of various cost and quality factors. Conventional trade analysis, on the other hand, focuses primarily on the trade of goods and services between countries.

Trade Analysis Involving Multinational Enterprises Differs from Our Conventional Trade