Which of the following are unit cost reductions associated with a large scale of output?
A.Comparative advantages
B.Factor endowments
C.Economies of scale
D.Diminishing returns
E.Absolute advantages
Answer:
Which of the following statements is true about innovations and entrepreneurship?
A.A command economy creates greater incentives for innovation and entrepreneurship
than a market economy.
B.If a country’s economy is to sustain long-run economic growth, the business
environment must restrict entrepreneurial activity.
C.A high level of entrepreneurial activity leads to a low level of innovation.
D.Innovations in production and business processes lead to an increase in the
productivity of labor and capital.
E.Strong legal protection of property rights creates an unfavorable environment for
innovation and entrepreneurship.
Answer:
Which of the following is a drawback of longer distribution channels?
A.Higher selling costs in a fragmented retail sector
B.The inability to enter exclusive distribution channels
C.Lower selling costs in a concentrated retail sector
D.Lower product prices
E.Greater aggregate markups
Answer:
The country of Argonia and the country of Berylia imposed tariffs on imports from all
countries. They set up a free trade area, removing all trade barriers between themselves
but maintaining tariffs on imports from the rest of the world. Argonia now begins to
import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a
higher cost. Thus, Argonia benefits from this transaction. This is known as:
A.trade creation
B.strategic pricing
C.synergy
D.trade diversion
E.protectionism
Answer:
Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the
European Union (EU) marketplace. To do so, the EU requires the company to:
A.adopt techniques of total quality management.
B.achieve Six Sigma.
C.use just-in-time inventory system.
D.patent its designs and technology.
E.certify its products under ISO 9000.
Answer:
Which of the following is true of the International Bank for Reconstruction and
Development (IBRD) scheme of the World Bank?
A.Resources to fund IBRD loans are raised through subscriptions from wealthy
members.
B.The interest rate charged by the World Bank is higher than the commercial banks’
market rate.
C.Borrowers have to pay the bank’s cost of funds plus a margin for expenses.
D.The bank avoids offering low-interest loans to risky customers whose credit rating is
often poor.
E.It was established to approve currency devaluations that are beyond 10 percent.
Answer:
Which of the following statements is true about the current monetary system?
A.Use of instruments such as the forward market and swaps has decreased since the
breakdown of the Bretton Woods system.
B.The present monetary system lacks the volatile movements in exchange rates that
existed in a fixed exchange rate system.
C.The current foreign exchange market works exactly as depicted in the purchasing
power parity theory.
D.Instruments such as the forward market and swaps increase the foreign exchange risk
a company faces.
E.A combination of government intervention and speculative activity drives the current
foreign exchange market.
Answer:
Which of the following is a reason why Great Britain and the United States could
finance their deficits by borrowing private money since the early 1970s?
A.Rapid development of global capital markets
B.Shortage of International Monetary Fund grants available for disbursal
C.High interest rate charged by the International Monetary Fund
D.Establishment of currency boards in these countries
E.Decline of the Bretton Woods system
Answer:
Turnkey projects being short-term propositions can be disadvantageous for a firm if a
country subsequently proves to be a major market for the output of the process that has
been exported. The firm can get around this problem by:
A.selling competitive advantage to competitors.
B.competing with the local firm in the global market.
C.taking a minority equity interest in the operation.
D.withholding vital process technology from the local firm.
E.establishing a joint venture with a local firm.
Answer:
Which of the following is true of factor endowments according to Porter?
A.Basic factors, unlike advanced factors, are the most significant for competitive
advantage.
B.Basic factors can be upgraded by nations, while advanced factors are endowed by
nature.
C.The initial advantage provided by advanced factors is extended by investment in
basic factors.
D.Disadvantages in basic factors can create pressures to invest in advanced factors.
E.Advanced factors include climate, location, and demographics.
Answer:
In which kind of exchange rate system are the values of a set of currencies set against
each other at some mutually agreed on exchange rate?
A.Clean float
B.Floating
C.Fixed
D.Dirty-float
E.Pegged
Answer:
Which of the following is an important attribute for a product development team to
function effectively and meet all of its development milestones?
A.It should be led by a “heavyweight” project manager who has high status within the
organization.
B.The team members should always be physically in diverse locations in order to cover
multiple bases.
C.It should have preset processes for communication and conflict resolution that are
developed by top management.
D.It should have at least three members from each key function included.
E.Its team members should be a part of more than two cross-functional teams.
Answer:
Which of the following occurs when two parties agree to exchange currency and
execute the deal at some specific date in the future?
A.Forward exchange
B.Spot exchange
C.Carry trade
D.Currency swap
E.Arbitrage
Answer:
Which of the following advantages is most likely to be enjoyed by a company as a part
of the first-mover advantages?
A.Increasing returns to specialization
B.A positive-sum game due to lack of competition
C.The ability to capture scale economies ahead of later entrants
D.Absolute advantage and higher efficiency
E.The ability to specialize in the production of a particular product
Answer:
3M, an American firm, manufactures adhesive tapes in St. Paul, Minnesota, and ships
the tapes to South Korea for sale. According to this information, which of the following
is being done by 3M?
A.Exporting
B.Licensing
C.Franchising
D.Insourcing
E.Outsourcing
Answer:
Which of the following is true of the European Free Trade Association (EFTA)?
A.The emphasis of EFTA has been on free trade in agricultural goods.
B.Industrial goods were left out of the trade arrangement, each member being allowed
to determine its own level of support.
C.Members cannot determine the level of protection applied to goods coming from
outside EFTA.
D.It was founded by those western European countries that initially decided not to be
part of the European Community.
E.It imposes a common tariff, of 5 to 20 percent, on products imported from outside.
Answer:
Which of the following is an objective of logistics?
A.Increase the cost of value creation
B.Manage a firm’s global supply chain at a low cost
C.Reduce inventory turnover
D.Reduce a firm’s customer responsiveness
E.Increase inventory holding costs
Answer:
Which of the following is true with regard to regional economic integration?
A.Agreements designed to promote freer trade within regions have failed to produce
gains from trade for all member countries.
B.World Trade Organization members are not required to notify the organization of any
regional trade agreements in which they participate.
C.Regional economic integration is good for consumers because it lowers prices.
D.Regional economic integration benefits producers because they do not have to adapt
to a more competitive environment.
E.The movement toward regional economic integration has been most successful in
Asia.
Answer:
The risks associated with learning to do business in a new culture are less if the firm:
A.engages in global strategic coordination.
B.imposes strict marketing guidelines on how to do business.
C.enters a greenfield venture in the host country.
D.realizes substantial location economies.
E.acquires an established host-country enterprise.
Answer:
Which of the following is true regarding the difference between GATT and WTO?
A.The WTO was encouraged to extend its reach to encompass regulations governing
foreign direct investment unlike GATT.
B.WTO operates on the basis of consensus unlike GATT.
C.GATT gives trading partners the right to compensation or, in the last resort, to impose
(commensurate) trade sanctions unlike WTO.
D.GATT’s verdict is binding unlike that of WTO’s.
E.WTO allows member-countries to block adoption of arbitration reports unlike GATT.
Answer:
How is a country’s currency referred to when its government allows both residents and
nonresidents to purchase unlimited amounts of a foreign currency with it?
A.Externally convertible
B.Nonconvertible
C.Leading
D.Freely convertible
E.Lagging
Answer:
Capricorn Creative Inc., a U.S.-based advertising firm, was the first in the advertising
industry to identify the growth potential of Brazil and to make huge investments in its
economy. As a result, the firm was able to build brand loyalty and gain experience in
that country’s business practices. In the language of business strategy, Capricorn
Creative has typically benefited from:
A.a first-mover advantage.
B.forward integration.
C.unrelated differentiation.
D.lateral diversification.
E.technology transfer.
Answer:
Which of the following statements is true about the gold standard?
A.Given a common gold standard, the value of any currency in units of any other
currency was easy to determine.
B.Establishing a gold standard seemed impractical as the volume of international trade
expanded in the wake of the Industrial Revolution.
C.A drawback of the gold standard was that it failed to provide a mechanism for
achieving balance-of-trade equilibrium by all countries.
D.Under the gold standard, when a country has a trade deficit, there will be a net flow
of gold from the other countries to that country.
E.The gold standard refers to the use of gold coins as a medium of exchange between
countries involved in international trade.
Answer:
Which of the following companies adheres to the total quality management steps
identified by W. Edward Deming?
A.Unisorn Inc. believes in empowering employees by reducing interactions between
them and their supervisors.
B.Galaxy Inc. empowers its employees to report problems or recommend
improvements without any fear.
C.New Run Inc. bases its work standards solely on numbers or quotas.
D.Ovion Inc. believes that the management is not responsible for training employees in
new skills.
E.Tirex Inc. endorses that the achievement of better quality is solely dependent on the
lower management.
Answer:
Which industry is often thought of as one in which global standardization of the
marketing mix is the norm?
A.Electronics
B.Retail
C.Pharmaceutical
D.Financial services
E.Heavy machinery
Answer:
A person seeking and receiving help through a guanxi network is:
A.liable to a social sanction if he or she does not reciprocate when called upon.
B.considered to be disloyal to his or her superiors.
C.free from reciprocal obligations.
D.not a follower of Confucian ethics.
E.hesitant to commit to cooperative ventures.
Answer:
In the context of social structure, American society is characterized by a low degree of:
A.social stratification.
B.mobility between strata.
C.entrepreneurial activity.
D.managerial mobility.
E.dynamism and innovation.
Answer:
The rise of Islamic fundamentalism is, in part, a response to the:
A.denial of equal rights for women and other minorities.
B.movement in traditional Islamic societies toward modernization.
C.narrowing gap between the rich and the poor.
D.increasing standard of living in Islamic societies.
E.widening gap between the highly developed and the less developed nations.
Answer:
Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than
two countries. As a result, it would be most appropriate to refer to Silver Fire Electric as
what type of enterprise?
A.Greenfield
B.Universal
C.Private
D.Multinational
E.Public
Answer:
Which of the following is an ethical system that has influenced behavior and shaped
culture in parts of Asia and is not considered as a religion?
A.Confucianism
B.Hinduism
C.Islam
D.Christianity
E.Buddhism
Answer: