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51) ________ duties are levied as a percentage of the value of the goods imported.
A) Specific
B) Protective
C) Prohibitive
D) Ad valorem
E) Compound
52) What primary discriminatory tax must be taken into account in foreign competition?
A) transfer taxes
B) tariffs
C) tolls
D) excise taxes
E) inflation taxes
53) In a deflationary market, in order to win the trust of consumers, it is essential for a company
to
A) engage in forfaiting agreements with consumers.
B) spend more on advertising and stall the production of products.
C) allow prices to escalate and target the price insensitive segment of the market.
D) keep prices low and raise brand value.
E) form a cartel to control the dynamics of the market.
54) When the value of the dollar is weak relative to the buyer's currency, sellers usually use
________ pricing.
A) competition-based
B) demand-based
C) premium
D) psychological
E) cost-plus
55) When the Indian rupee depreciated against the U.S. dollar, PC manufacturers who were
dependent on imported components had to either absorb the increased cost or
A) raise the quantity of inputs they used in production.
B) give discounts to their customers.
C) increase the wages that they paid to labor.
D) increase the production of PCs.
E) raise the price of PCs.
56) When a company exports a product from the United States to another country, the company
is most likely to be unable to determine the ultimate price of a product if
A) the channels of distribution are short.
B) the number of middlemen in its distribution channels is low.
C) large orders are placed by retailers.
D) marketing and distribution channel infrastructures are well developed.
E) the middleman markups are not standardized.
57) What is the most probable reason a manufacturer would choose to conduct its manufacturing
operations in a third country?
A) to standardize middlemen margins
B) to reduce the credit risk of the seller
C) to increase the capital–labor ratio
D) to avoid antidumping duties
E) to reduce manufacturing costs
58) Lower prices to the buyer may also mean lower tariffs, because most tariffs are levied on
a(n) ________ basis.
A) specific
B) alternative
C) accrual
D) shorter, lower
E) ad valorem
59) The creation of a free trade zone may lead to
A) a decline in exports.
B) an increase in taxes and duties levied on a product.
C) a reduction in the price escalation.
D) a decline in imports.
E) an increase in labor costs and overheads.
60) By shipping unassembled goods to a free trade zone (FTZ) in an importing country, a
marketer can typically lower costs because
A) labor costs are higher in the importing country.
B) the final prices of the goods are adjusted for inflation.
C) use of unassembled goods gives the marketer immunity from dumping penalties.
D) duties are typically assessed at lower rates for unassembled goods.
E) local content used in production is low.
61) A marketer may face lower costs by shipping unassembled goods to a free trade zone (FTZ)
in an importing country because
A) locally produced components may not be used in production.
B) labor costs may be lower in the importing country.
C) FTZs levy higher taxes and surcharges on imported goods.
D) ocean transportation rates may not be affected by the weight and volume of the components.
E) duties may be assessed at a higher rate for unassembled goods.
62) The costs of production may be lowered if a firm ships unassembled goods to a free trade
zone (FTZ) in an importing country because
A) wages and other overheads may be higher in an FTZ.
B) locally produced components do not qualify for tariffs.
C) unassembled goods may qualify for lower freight rates.
D) the finished goods cannot be exported to other countries.
E) goods imported in an FTZ qualify for the same level of tariffs as other imported goods.
63) Dumping has been defined as the situation in which a product is sold in the international
market
A) at a price below the cost of production.
B) only to the premium, price insensitive segment of the market.
C) where the demand for the product is lower than in the domestic market.
D) at a higher price than in the domestic market.
E) at the same price as in the domestic market.
64) What is the function of a countervailing duty?
A) balance revenues against costs
B) restrict the amount a country will import
C) increase revenues from parallel imports
D) increase the amount a country will export
E) permit the use of foreign currency within the country
65) A ________, which restricts the amount a country will import, may be imposed on foreign
goods benefiting from subsidies, whether in production, export, or transportation.
A) trigger volume
B) trigger price
C) minimum access volume
D) market access opportunity
E) substantial cause
66) For ________ duties to be levied on a product, it must be shown that prices are lower in the
importing country than in the exporting country and that producers in the importing country are
being directly harmed by the dumping of the product.
A) countertrade
B) domestic protection
C) countervailing
D) foreign practice
E) import restriction
67) Dumping in the world markets is most likely to increase when
A) domestic production capacity is low.
B) demand in the home country is low.
C) demand in the foreign country is low.
D) foreign production capacity is high.
E) cost of production is low.
68) Assembly in the importing country is a way companies attempt to lower prices and avoid
dumping charges. These assembly plants are known as ________ plants.
A) antidumping
B) screwdriver
C) import-oriented
D) export-oriented
E) automated
69) An important selling technique to alleviate high prices and capital shortages for capital
equipment is the ________ system.
A) leasing
B) antidumping
C) direct buy-back
D) consignment
E) rental
70) What would be considered an advantage of leasing equipment rather than owning it?
A) Lease revenue tends to fluctuate greatly.
B) Leased equipment rarely breaks down.
C) Leasing helps guarantee better maintenance on overseas equipment.
D) Leasing keeps companies from using experimental equipment.
E) Leasing is less risky than outright sale of equipment.
71) When Burger Boys an American fast-food company, wanted to market its burgers and fries
in France, it was asked to import French mustard to the United States in return. This is an
example of
A) bargaining.
B) countervailing duties.
C) buy-back.
D) countertrade.
E) bribery.
72) The use of countertrade in international trade
A) allows trade with countries short of hard currency.
B) reduces a firm's competitive advantage.
C) increases the tax liabilities of trading firms.
D) leads to a loss of revenue.
E) is considered unethical.
73) A crucial problem confronting a seller in a countertrade negotiation is determining the
________ for the goods offered as payment.
A) delivery method
B) warranties
C) insurance premiums
D) potential demand
E) the cost
74) What do barter houses do?
A) They specialize in trading goods acquired through barter arrangements.
B) They negotiate barter arrangements with countries that accept the U.S. currency as a
countertrade.
C) They specialize in bartering with third countries for unused raw materials.
D) They direct bartered goods to the World Trade Organization for its approval.
E) They review disputes in barter arrangements at the request of the International Court of
Justice.
75) ________ are the primary outside source of aid for companies affected by the uncertainty of
a countertrade.
A) Trade unions
B) Barter houses
C) Industry associations
D) Swap centers
E) Satellite towns
76) What is true of price quotations for international sale?
A) Price quotations can be made only if it is shown that prices are lower in the importing country
than in the exporting country.
B) Price quotations must specify the currency to be used, credit terms of the transaction, and
documents required.
C) The price quotation and contract should define only the quantity of goods and not necessarily
the quality.
D) Price quotations must be quoted only in terms of electronic trade dollars.
E) Price quotations need to specify the transportation charges but need not necessarily state what
type of documentation needs to be used.
