The race to the bottom scenario of global environmental degradation is explained roughly like this:
A. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.
B. Companies seek to reduce their costs of operation on plant and equipment design and this results in higher levels of pollution.
C. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution.
D. Companies seek to influence environmental legislation standards to the lowest possible standards in the U.S. in order to maximize profits.
Answer: A. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.
You might also like to view...
How large a firm becomes is determined by
A) the demand for its product. B) the availability of economies of scale. C) the availability of economies of scope. D) the availability of specialized managers.
Direct foreign investment is considered an attractive investment because
a. it is usually focused on infrastructure b. it initiates projects that are later taken over by domestic entrepreneurs c. it only employs foreign workers so it doesn't interfere with domestic development planning d. it typically involves bringing into the LDCs new expertise e. it replaces domestic investment