Question 1: Even if production costs are higher in a foreign country, a U.S. firm may establish a manufacturing plant in the foreign country now if:
A) the host government of that country eliminates all quotas.
B) the host government of that country reduces all quotas.
C) the host government of that country increases all quotas.
D) the host government of that country eliminates all tariffs.
Question 2: Consider Firm "A" and Firm "B" that both produce the same product. Firm "A" would more likely have more stable cash flows if its percentage of foreign sales were __________ and the number of foreign countries it sold products to was __________.
A) higher; large
B) higher; small
C) lower; small
D) higher; large
Question 3: If a U.S. firm's revenues are more susceptible to exchange rate movements than expenses, the firm will _______ if the dollar _______.
A) benefit; weakens
B) be unaffected; weakens
C) be unaffected; strengthens
D) benefit; strengthens