Choose the given statement as True/False

MNCs sell their product in areas where they get cheap labour.

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True

False

answer is B.

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Detailed Solution

The given statement is false.
MNCs set up their production in areas where they get cheap labour because it decreases their cost and increases their profits. Most multinational companies belong to developed countries. The cost of production in these countries is high due to the higher cost of the factors of production. So these MNCs have shifted to other countries for production where they can produce some goods at low costs. Most developing countries have ample and cheap availability of skilled and unskilled labour. This reduces the cost of production and increases the profit for the MNC. It also provides a market for its products. The correct statement would be that MNCs set up their production in areas where they get cheap labour.

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