Which of the following best explains how technology can make entering foreign markets easier?

• A. By increasing tariffs on imported goods
• B. By improving communication and reducing transaction costs between firms and international customers
• C. By limiting access to global information networks
• D. By making transportation of goods more expensive

Answer: (B)

Verified step by step guidance

1. Understand the role of technology in international trade, focusing on how it affects communication, information flow, and transaction costs between firms and customers across borders.
2. Recognize that tariffs are government-imposed taxes on imports, which are unrelated to technology's direct effect on market entry; thus, increasing tariffs does not make entering foreign markets easier.
3. Consider how technology improves communication channels (e.g., internet, video conferencing) and access to global information networks, which help firms coordinate, negotiate, and manage international operations more efficiently.
4. Analyze how reduced transaction costs—such as lower search, negotiation, and enforcement costs—facilitated by technology, make it easier and less costly for firms to enter and operate in foreign markets.
5. Conclude that the best explanation is that technology eases foreign market entry by improving communication and reducing transaction costs, rather than by increasing tariffs, limiting information access, or raising transportation costs.