Which of the following is defined as a central political apparatus that coordinates the
economic, social, and foreign policy of the member-states?
A.Free trade area
B.Political union
C.Economic union
D.Common market
E.Command economy
Answer:
Which of the following statements is true about the changing economic system since
the 1980s?
A.There has been a shift from market-based economies to centrally planned economies.
B.There has been a shift away from a mixed economy.
C.Many states have restricted the sale of state-owned businesses to private investors.
D.The competition between economies has been reducing.
E.The extent to which property rights are protected has declined.
Answer:
Which of the following is a reason for the failure of the purchasing power parity (PPP)
theory to predict exchange rates accurately?
A.It assumes away transportation costs and trade barriers.
B.It does not take into account the law of one price.
C.It does not take into account the practice of arbitrage.
D.It assumes that the markets are not efficient.
E.It does not consider government influence on a nation’s money supply.
Answer:
Which of the following requires that some specific fraction of a good must be produced
domestically?
A.International allocation requirement
B.Local content requirement
C.Specific quota requirement
D.Ad valorem portion requirement
E.Domestic sales requirement
Answer:
If a society emphasizes the group as the primary unit of social organization, it is most
likely to:
A.encourage competition between the members of the group.
B.expose managers to different ways of doing business.
C.foster dynamism and entrepreneurship.
D.discourage employees from moving from company to company.
E.fail to facilitate self-managing work teams.
Answer:
Which of the following statements is true of Six Sigma?
A.The higher the number of ‘sigmas,” the higher the number of errors.
B.At Six Sigma, a production process would be 90 percent accurate.
C.Six Sigma work standards are based solely on numbers or quotas.
D.It is almost impossible for a company to achieve Six Sigma perfection.
E.Six Sigma is the modern successor to ISO 9000.
Answer:
A firm’s profitability is maximized when it:
A.creates products similar to the products of its competitors.
B.strips all the value out of its product offering.
C.ensures that it has the right organization structure in place to execute its strategy.
D.picks a position on the efficiency frontier that is not viable.
E.does not configure its internal operations to reduce costs.
Answer:
Which of the following is true of the differences in relative demand and supply of
currencies?
A.They cannot be used to explain the determination of exchange rates.
B.While they provide an understanding of the major factors underlying exchange rates,
they exclude minor factors.
C.They provide a high-level understanding of exchange rates.
D.While they provide an accurate explanation for appreciation of currencies, they fail to
explain depreciation.
E.They cannot explain or predict when the demand of a particular currency would
exceed its supply and vice versa.
Answer:
Max Weber argued that the ascetic principles embedded in which of the following do
not encourage entrepreneurial activity in pursuit of wealth creation because it is
perceived that such activities make the attainment of nirvana more difficult?
A.Islam
B.Hinduism
C.Confucianism
D.Protestantism
E.Capitalism
Answer:
The work by Jeffrey Sachs suggests that investments in which of the following help
explain why some countries in Southeast Asia have been able to overcome the
disadvantages associated with their tropical geography and grow far more rapidly than
tropical nations in Africa and Latin America?
A.Nuclear weapons
B.Education
C.Terrorist activities
D.Nationalization of private properties
E.Active bartering
Answer:
Which of the following is a potentially critical variable that can jeopardize the
effectiveness of a firm’s international communication?
A.Channel length
B.Market segmentation
C.Import effects
D.Noise levels
E.Channel quality
Answer:
If a basket of goods costs $100 in the United States and €120 in Europe, what would the
purchasing power parity theory’s prediction of the dollar/euro exchange rate be?
A.$1 = €1.20
B.$1 = €1
C.$1 = €0.80
D.$1 = €0.90
E.$1 = €1.10
Answer:
If a firm is unable to keep its national markets separate, individuals or businesses may
undercut its attempt at price discrimination by engaging in:
A.speculation.
B.arbitrage.
C.dumping.
D.predatory pricing.
E.forecasting.
Answer:
Which of the following statements is true about economies of scale?
A.Economies of scale lead to an increase in the average unit cost of a product.
B.Attaining economies of scale increases a firm’s profitability.
C.The ability to spread variable costs over a large volume is a source of economies of
scale.
D.Economies of scale result due to the increase in the perceived value of a product.
E.Economies of scale refer to cost savings that come from learning by doing.
Answer:
Which of the following contradicts Theodore Levitt’s arguments for the globalization of
world markets?
A.Consumers in most developed countries do not sacrifice preferred attributes for lower
prices.
B.Tastes and preferences are becoming more cosmopolitan due to cultural convergence.
C.Similar product and technical standards across countries help a firm sell the same
product worldwide.
D.The emergence of the global youth segment is evidence of market segments that
transcend national borders.
E.The structure of market segments is extremely similar in various countries.
Answer:
Which of the following best exemplifies ethnocentrism?
A.Sarah believes that her opinions and interests are superior to that of her siblings.
B.Nicole is highly tolerant toward different cultures and is also keen on learning
different languages.
C.Bryan’s belief in the superiority of his culture has resulted in conflicts with his
colleagues from different countries.
D.Emilio is in an ethical dilemma as he has been given the responsibility of deciding
whether or not to hire his under-qualified cousin.
E.Galaxy Inc. has been accused of using legal but unethical ways to gain access into the
markets of less developed countries.
Answer:
The appropriateness of the strategy that a firm chooses to use in an international market
varies with the extent of pressures for:
A.quality improvement and product standardization.
B.customer surplus and quality improvements.
C.customer surplus and product standardization.
D.cost reductions and local responsiveness.
E.product standardization and cost reductions.
Answer:
Which of the following factors determines the value that an international business can
create in a foreign market?
A.Population density in the foreign market
B.Political stability of the foreign market
C.Nature of indigenous competition
D.Per capita income in the foreign market
E.Type of political system in the foreign market
Answer:
Which of the following best indicates the motive for foreign firms to engage in
dumping?
A.Unloading excess production in foreign markets
B.Cutting labor costs to reduce the costs of production
C.Providing a wider range of products for consumers in foreign markets
D.Meeting the voluntary export requirements imposed on it
E.Obtaining subsidies from the importing country
Answer:
Which of the following is a reason for the decline in the popularity of the radical view
of FDI?
A.The rise of communism in Eastern Europe
B.The generally steady economic growth of those countries that embraced the radical
position
C.The growing belief in many countries that FDI leads to loss of jobs
D.The strong economic performance of those developing countries that embraced
capitalism
E.The collapse of capitalism in the newly independent nations of Asia
Answer:
Which of the following statements is true about an international strategy?
A.International strategy typically involves taking products first produced for foreign
markets and then customizing them for domestic markets.
B.International strategy should be pursued by a firm if it manufactures a product that
satisfies local, rather than universal, needs.
C.When a firm pursues an international strategy, the head office of the firm retains
fairly tight control over marketing and product strategy.
D.Firms pursuing the international strategy tend to outsource their development
functions such as R&D.
E.International strategy should be pursued by a firm only if it faces strong competition
in foreign markets.
Answer:
Which of the following is a value creation activity that falls into the category of primary
activities?
A.Creation and maintenance of information systems
B.Customer service
C.Human resources
D.Logistics
E.Company infrastructure maintenance
Answer:
Which of the following refers to the extent to which the place of manufacturing
influences product evaluations?
A.Noise levels
B.Country of origin effects
C.Source effects
D.Push strategies
E.Pull strategies
Answer:
Which of the following are bureaucratic rules designed to make it difficult for imports
to enter a country?
A.Voluntary export restraints
B.Consumer regulations
C.Subsidies
D.Administrative trade policies
E.Public sector regulations
Answer:
A charge of 15-20% was levied by the government of Cadmia on the value of
automobile accessories imported from a neighboring country. This increased the price
of those imported car accessories for the consumers in Cadmia. Which of the following
instruments of trade policy is being used by the government of Cadmia?
A.Local content tariff
B.Ad valorem tariff
C.Subsidies
D.Import quotas
E.Antidumping duties
Answer:
If a country’s government does not control the rate of growth in money supply:
A.its future inflation rate will be low.
B.its taxes will decrease in the future.
C.it will see reduced spending on public infrastructure projects.
D.its currency could depreciate in the future.
E.its output of goods and services will exceed money supply, thereby fueling deflation.
Answer:
Which of the following is a feature of a common market?
A.Absence of a common external trade policy with regard to nonmembers
B.Free movement of factors of production between member nations
C.Establishment of barriers to the free flow of goods between member nations
D.Lack of administrative machinery to oversee trade relations with nonmembers
E.Mandatory use of a common currency among member nations
Answer:
Which of the following protects the Nike “Swoosh” logo from being used by any other
shoe manufacturer?
A.Trademark
B.Affidavit
C.Patent
D.Warrant
E.Writ
Answer:
In a business setting, the term noblesse oblige refers to:
A.a benevolent behavior that is considered the responsibility of successful enterprises.
B.obliging a government official with the expectation of a reciprocal favor.
C.rich corporations abusing their power for private gain.
D.preferential treatment received by successful companies from governments.
E.tax exemptions that are given only to local companies but not to foreign companies.
Answer:
According to internalization theory:
A.licensing gives a firm the tight control over manufacturing, marketing, and strategy in
a foreign country that may be required to maximize its profitability.
B.licensing may result in a firm’s giving away valuable technological know-how to a
potential foreign competitor.
C.licensing has no major drawbacks as a strategy for exploiting foreign market
opportunities.
D.a problem with licensing arises when the firm’s competitive advantage is based much
on its products rather than on the management, marketing, and manufacturing
capabilities that produce those products.
E.licensing is more profitable than FDI.
Answer:
When Shop Smart opened its first super market in China it was unable to generate any
sales. After conducting a research, it was understood that the local sales personnel
found it difficult to communicate with the American store managers. In addition,
Chinese consumers found it difficult to shop in the American way. Shop Smart’s failure
in China can be attributed to the lack of:
A.cross-cultural literacy.
B.class consciousness.
C.a first-mover advantage.
D.Confucian dynamism.
E.ethnocentrism.
Answer:
Which of the following factors in a country is most likely to cause political risk for an
international business?
A.The presence of more than one ethnic nationality
B.Infrequent changes in government and government policy
C.Low inflation rate
D.Low level of government debt
E.High living standards
Answer:
Which of the following refers to a logistics system designed to deliver parts to a
production process as they are needed, not before?
A.Inventory information system
B.Basket trading system
C.Buffer stock system
D.Just-in-time inventory system
E.Real-time processing system
Answer:
Which of the following statements is true of Confucianism?
A.Confucianism is a religion principally followed in India, Korea, and Japan.
B.Confucianism preaches about the supernatural, the concept of a supreme being, and
an afterlife.
C.Confucian ethics raise the costs of doing business in China, Japan, South Korea, and
Taiwan.
D.Conflict between management and labor tends to be high in the countries that follow
Confucianism.
E.In Confucian thought, loyalty to one’s superiors is regarded as a sacred duty.
Answer:
Which of the following is an advantage of exporting?
A.It helps in easy currency conversion.
B.It provides large revenue and profit opportunities.
C.It reduces the administrative costs incurred by a company.
D.It helps companies increase their unit costs.
E.It reduces paperwork and complex formalities.
Answer: