Question

When a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty, the process is termed

a) importing
b) exporting
c) licensing
d) countertrading

Answer 1

Licensing is the process where a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty.

Step-by-step explanation:

The process described in the question where a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty is called licensing.

Licensing is an arrangement in which the owner of intellectual property grants permission to another party to use that property in exchange for compensation. This allows the foreign company to manufacture and sell the product using the domestic firm's brand or technology.

For example, if a popular clothing brand in the United States allows a company in China to produce and sell clothing with their brand name, that would be considered licensing.