978-1259712357 Test Bank Chapter 18 Part 3

subject Type Homework Help
subject Pages 9
subject Words 3309
subject Authors Bruce Money, John Graham, Mary Gilly, Philip Cateora

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77) In general, the end goal of all ________ activities is to reduce the impact of price
competition or eliminate it.
A) reciprocal pricing
B) administered pricing
C) free trade
D) export-oriented trade
E) price skimming
78) What is an example of a price-fixing arrangement most directly associated with international
marketing?
A) price escalation
B) barter houses
C) letters of credit
D) cartels
E) countertrade
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79) A ________ exists when various companies producing similar products or services work
together to control markets for the types of goods and services they produce.
A) cabal
B) monopoly
C) cartel
D) producers' association
E) competitive market
80) OPEC is an example of a ________; it can control the price of oil by controlling the market.
A) cabal
B) monopoly
C) cartel
D) producers' association
E) competitive market
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81) What is the typical payment procedure for established customers where the goods are
delivered and the customer is billed on an end-of-the-month basis.
A) an open account
B) a letter of credit
C) a bill of exchange
D) cash in advance
E) forfaiting
82) A(n) ________ means that once the seller has accepted the credit, the buyer cannot alter it in
any way without permission of the seller.
A) open account
B) letter of credit
C) bill of lading
D) bill of regression
E) sales agreement
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83) A ________, which shifts the buyer's credit risk to the bank, is not a guarantee of payment to
the seller. Rather, payment is tendered only if the seller complies exactly with its terms.
A) open account
B) letter of credit
C) bill of lading
D) bill of regression
E) credit agreement
84) With ________, the seller assumes all risk until the actual dollars are received.
A) open accounts
B) irrevocable letters of credit
C) bills of exchange
D) factoring agreements
E) forfaiting contracts
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85) A company manufactures extremely specialized equipment for medical imaging. Because of
its value, when the company exports this equipment overseas to hospitals, it generally requires
________, which is a nonrefundable deposit.
A) a letter of credit
B) a dollar draft
C) a forfaiting contract
D) cash in advance
E) an open account
86) ________ leave sellers in a position where most of the problems of international commercial
finance work to their disadvantage.
A) Letters of credit
B) Dollar drafts
C) Forfaiting contracts
D) Cash in advance agreements
E) Open accounts
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87) In a(n) ________ transaction, the seller makes a one-time arrangement with a bank or other
financial institution to take over responsibility for collecting the account receivable.
A) forfaiting
B) factoring
C) barter
D) cash-in-advance payment
E) open account
88) Sales on open accounts are
A) very common as a method of payment in foreign trade.
B) generally recommended when special merchandise is ordered by the buyer.
C) not generally recommended when there is political unrest in the importer's country.
D) recommended when the country of the importer imposes difficult exchange restrictions.
E) less risky for the seller when it involves new buyers.
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89) In ________, a company has an ongoing relationship with a bank that routinely buys its
short-term accounts receivable at a discount.
A) forfaiting
B) factoring
C) a barter transaction
D) a cash-in-advance transaction
E) an open accounts transaction
90) Differentiate the two ways price decisions are viewed.
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91) Describe what happens in parallel importing. What are the advantages and disadvantages of
this practice?
Answer: Parallel importing occurs when importers buy products from distributors in one
country and sell them in another country to distributors who are not part of the manufacturer's
regular distribution system. Exclusive distribution, a practice often used by companies to
92) What is the difference between variable-cost pricing and full-cost pricing? When would a
company choose one over the other?
Answer: In variable-cost pricing, the firm is concerned only with the marginal or incremental
cost of producing goods to be sold in overseas markets. Such firms regard foreign sales as bonus
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93) What are common reasons why price escalation occurs in international marketing?
Answer: Excess profits exist in some international markets, but generally the cause of the
disproportionate difference in price between the exporting country and the importing country,
94) What is a tariff? What are the three basic ways in which tariffs may be levied?
Answer: A tariff, or duty, is a special form of taxation. Tariffs and other forms of import taxes
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95) What is a countertrade? What are the advantages and disadvantages of countertrading?
96) Making price quotations for international sales requires including a number of elements that
may not be relevant in domestic pricing. Explain the process and what must be considered.
Answer: In quoting the price of goods for international sale, a contract may include specific
elements affecting the price, such as credit, sales terms, and transportation. Parties to the
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97) What is administered pricing, and how does it differ from price fixing? How is it arranged in
international markets?
Answer: Administered pricing is an attempt to establish prices for an entire market. Such prices
may be arranged through the cooperation of competitors; through national, state, or local
98) Discuss the meaning and nature of cartels. Are these groups beneficial? State an example.
Answer: A cartel exists when various companies producing similar products or services work
together to control markets for the types of goods and services they produce. The cartel
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99) What is the difference between forfaiting and factoring?

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