Suppose Giocattolo estimates the demand for toy cars in Spain as 45,000 toys per year. Based on the curves AVC Spain and ATC Subsidiary, what is Giocattolo's best strategy? Establish a subsidiary factory in Spain. Invest in a country risk analysis. License production technology to a Spanish firm. Suppose that Giocattolo's fixed cost of managing foreign operations increased. Which of the following best describes how Giocattolo's decision making may change? The subsidiary becomes completely inefficient at higher levels of output. The subsidiary remains more efficient than licensing at output levels of above 60,000 toy cars. O Licensing remains more efficient than the subsidiary at a higher level of output. O The decision to license instead of forming a subsidiary will occur at a lower level of output.
Suppose Giocattolo estimates the demand for toy cars in Spain as 45,000 toys per year. Based on the curves AVC Spain and ATC Subsidiary, what is Giocattolo's best strategy? Establish a subsidiary factory in Spain. Invest in a country risk analysis. License production technology to a Spanish firm. Suppose that Giocattolo's fixed cost of managing foreign operations increased. Which of the following best describes how Giocattolo's decision making may change? The subsidiary becomes completely inefficient at higher levels of output. The subsidiary remains more efficient than licensing at output levels of above 60,000 toy cars. O Licensing remains more efficient than the subsidiary at a higher level of output. O The decision to license instead of forming a subsidiary will occur at a lower level of output.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter2: Fundamental Economic Concepts
Section: Chapter Questions
Problem 4E
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