1
Chinese vitamin producers defended their cartel by arguing
(A)
their costs were very high.
(B)
they raised prices to avoid accusations of dumping.
(C)
they were incompliance with U.S. law.
(D)
All of the above
2
The U.S. government responded to parallel exporters of luxury cars bought in the United
States for sale in China by ____________.
(A)
(B)
(C)
(D)
3
Letters of credit _____________.
(A)
are contracts associated with countertrade
(B)
determine who pays for the insurance of goods travelling between countries
(C)
help assure exporters receive payment
(D)
are government pre-approvals for specific transfer prices
4
Proctor and Gamble’s’ “reverse engineering” refers to ______________.
(A)
adapting a product from a developed country to sell in a developing country
(B)
adapting a product from a developing country to sell in a developed country
(C)
deciding on a price and then designing a product to meet that price
(D)
stealing product ideas from Unilever
5
Karavel Foods entered the Latin American market 20 years ago targeting the urban elites.
What should Karavel Foods consider concerning its pricing in the region?
(A)
Raise prices because Latin America’s GDP has increased
(B)
Lower prices to discourage parallel imports across the region
(C)
Lower prices to avoid dumping charges
(D)
Lower prices to target middle classes
6
ABC Automobiles entered Asian markets 20 years ago targeting the urban elites. What
should ABC consider concerning its pricing in the region?
(A)
Lower prices because Asia’s GDP has increased
(B)
Raise prices because Latin America’s GDP has increased
(C)
Lower prices to target middle classes
(D)
Raise prices to discourage parallel imports across the region
7
Paris Pharmaceuticals entered Middle East markets 20 years ago targeting the urban
elites. What should Paris Pharmaceuticals consider concerning its pricing in the region?
(A)
Raise prices because the population has increased
(B)
Lower prices to avoid dumping charges
(C)
Raise prices to avoid dumping charges
(D)
Lower prices to target middle classes
8
LeBlanc Enterprises markets high-end purses and scarves. When determining a pricing
policy for its Latin American markets, the firm should consider
(A)
income of buyers
(B)
discretionary income of buyers
(C)
independent income of buyers
(D)
variable income of buyers
9
Latin Shoes markets high-end footwear. When determining a pricing policy for its Asian
markets, the firm should consider
(A)
income of buyers
(B)
variable income of buyers
(C)
independent income of buyers
(D)
discretionary income of buyers
10
Action Toys markets toys for children and adults. When determining a pricing policy for its
Middle East markets, the firm should consider
(A)
income of buyers
(B)
discretionary income of buyers
(C)
variable income of buyers
(D)
independent income of buyers
11
Paris Pharmaceuticals, a French company, has been invited to join a cartel. What advice
would you give the firm?
(A)
Don’t. It’s illegal
(B)
Don’t. It will cause your prices to decrease
(C)
Do. It will decrease your costs
(D)
Do. It will increase your market coverage
12
Taberet, a German company, has been invited to join a cartel. What advice would you give
the firm?
(A)
Do. It will increase your market coverage
(B)
Do. It will decrease your costs
(C)
Don’t. It will cause your prices to decrease
(D)
Don’t. It’s illegal
13
Tunetoy Industries, a U.S. MNC, has been invited to join a cartel. What advice would you
give the firm?
(A)
Do. It will decrease your costs
(B)
Do. It will increase your market coverage
(C)
Don’t. It will cause your prices to decrease
(D)
Don’t. It’s illegal
14
In Africa, KFC discovered that __________.
(A)
consumers could not afford the their product
(B)
the cost of chicken varied greatly between countries
(C)
price controls made operations unviable in several countries
(D)
transfer pricing was disallowed by many governments
15
What differences prevent a company from setting a uniform global pricing strategy?
(A)
Tax rates
(B)
Trade margins
(C)
Tariffs
(D)
All of the above
16
When the value of the euro drops against the U.S. dollar,
(A)
European products become cheaper in the U.S. market.
(B)
European products become more expensive to sell in the U.S. market.
(C)
there are no changes in the prices.
(D)
European product quality decreases.
17
Canada, Japan, and many European states have price controls on
(A)
alcohol
(B)
cigarettes
(C)
pharmaceuticals
(D)
accounting firms
18
The practice of selling a product at a price below actual costs is referred to as
(A)
cartelling
(B)
economies of scale
(C)
hedging
(D)
dumping
19
My Dollarstores charged higher prices in India than in the USA because of
(A)
transportation costs
(B)
tariffs
(C)
an affluent target market
(D)
All of the above
20
The price paid by an importing or buying unit of a multinational firm to an exporting unit
of the same firm is known as
(A)
international transfer price
(B)
transaction risk
(C)
fixed price
(D)
marginal price
21
Governments examine international transfer prices because transfer prices can
(A)
lower tax revenues
(B)
lower GDP
(C)
lower exchange rates
(D)
increase political risk
22
Fluctuating currency values contribute to
(A)
transaction risk
(B)
parallel imports
(C)
Both a and b
(D)
None of the above
23
Most developing countries have adopted which principle for dealing with parallel imports?
(A)
National exhaustion
(B)
Regional exhaustion
(C)
International exhaustion
(D)
Local exhaustion
24
The EU has adopted which principle for dealing with parallel imports?
(A)
National exhaustion
(B)
Regional exhaustion
(C)
International exhaustion
(D)
Local exhaustion
25
Parallel imports exist due to
(A)
inflation
(B)
differences in prices across markets
(C)
uniform pricing
(D)
government price controls
26
A law in South Africa requires parallel importers to alert consumers to the fact that
(A)
the product they sell can be purchased cheaper elsewhere.
(B)
the product they sell might be counterfeit
(C)
authorized dealers need not honor the manufacturer warranty on a parallel import.
(D)
authorized dealers could sue the purchaser of a parallel import.
27
Global price fixing is encouraged by
(A)
variable tariffs
(B)
government price controls
(C)
global segments
(D)
intense competition
28
Tottenham Tartans, a British clothing firm, is concerned about export price escalation in
its Brazilian market. It should consider
(A)
establishing a cartel
(B)
increasing its transfer prices to Brazil
(C)
establishing price controls
(D)
promoting its products as luxury items
29
Tunetoy Industries is concerned about export price escalation for its personal computers
in its Thai market. It should consider
(A)
promoting its products as luxury items
(B)
establishing a cartel
(C)
joining a cartel
(D)
increasing its transfer prices to Thailand
30
Tottenham Tartans is concerned about parallel imports entering the German market from
France. The firm should
(A)
sue parallel importers under the international exhaustion principle
(B)
sue parallel importers under the regional exhaustion principle
(C)
establish a uniform pricing policy across Germany and France
(D)
reassess its transfer pricing policy to independent distributors
31
Tin City Bicycles is concerned about parallel imports entering the German market from the
U.K. The firm should
(A)
sue parallel importers under the international exhaustion principle
(B)
sue parallel importers under the regional exhaustion principle
(C)
reassess its transfer pricing policy to independent distributors
(D)
None of the above
32
Indopharm is negotiating for a major contract to supply pharmaceuticals to the Malaysian
military. However, the Malaysian government wants the firm to take half payment in
Malaysian palm oil. The firm should
(A)
insist on a buyback
(B)
insist on a switch trade
(C)
insist that the palm oil be replaced by a soft good
(D)
raise its proposed price for the contract
33
ABC Automobiles is negotiating for a major contract to supply police cars to Malaysia.
However, the Malaysian government wants the firm to take half payment in Malaysian
palm oil. The firm should
(A)
insist on a buyback
(B)
insist on a switch trade
(C)
raise its proposed price for the contract
(D)
decrease its proposed price for the contract
34
Indopharm is negotiating for a major contract to supply pharmaceuticals to the Brazilian
health care system. However, the Brazilian government wants the firm to take half
payment in Brazilian commodities. The firm should
(A)
insist on a buyback
(B)
insist that the commodities be replaced by a soft goods
(C)
raise its proposed price for the contract.
(D)
All of the above
35
^___^ costs change directly with volume of output produced.
36
The amount of money left after the basic necessities of food, shelter, and clothing are met
is known as ^___^ income.
37
The practice of selling a product at a price below actual costs is referred to as ^___^.
38
The price paid by the importing or buying unit of a firm to the exporting unit of the firm is
known as the ^___^ price.
39
^___^ is the risk when two currencies are involved and a change in exchange rates may
occur between the invoicing date and the settlement date.
40
To reduce the transaction risk, a company can opt to contract through financial
intermediaries for future delivery of foreign currency at a set price, regardless of the spot
price at that time, which is known as ^___^.
41
^___^ occur when individual buyers step in and buy products in low-price countries to re-
export to high-price countries, profiting from the price differential.
42
Texas Tents, a U.S. firm, wants to stop parallel imports between Italy and Germany. Why
might this be difficult to do?
(A)
Italy applies the national exhaustion principle
(B)
Germany applies the national exhaustion principle
(C)
The U.S. applies the national exhaustion principle
(D)
None of the above
43
Latin Shoes wants to shut down parallel imports between France and Germany. Why
might this be difficult to do?
(A)
France applies the national exhaustion principle
(B)
Germany applies the national exhaustion principle
(C)
The EU applies the international exhaustion principle
(D)
The EU applies the regional exhaustion principle
44
Taberet, a German firm, is concerned about export price escalation in its U.S. market. It
should consider
(A)
increasing its transfer prices to the U.S.
(B)
promoting its products as luxury items
(C)
joining a U.S. cartel
(D)
joining a German cartel
45
Paris Pharmaceuticals wishes to establish a pricing policy to avoid dumping charges in a
West African country. Three global pharmaceutical firms export to the country, but there
is no local manufacture of pharmaceuticals. Paris Pharmaceuticals should
(A)
be sure its prices are not much higher than the prices of the other MNCs
(B)
be sure its prices are not much lower than the prices of the other MNCs
(C)
ask for price controls
(D)
None of the above
46
Indopharm wishes to establish a pricing policy to avoid dumping charges in a small Asian
country. Three global pharmaceutical firms export to the country, but there is no local
manufacture of pharmaceuticals. Indopharm should
(A)
receive price approval from the local government
(B)
be sure its prices are not much higher than the prices of the other MNCs
(C)
be sure its prices are not much lower than the prices of the other MNCs
(D)
None of the above
47
MabHill Corporation markets widgets to manufacturers worldwide and wishes to establish
a pricing policy to avoid dumping charges in a Latin American country. Besides MabHill, 3
MNCs export to the country. There is no local manufacture of widgets. What is wrong with
this scenario?
(A)
MabHill should be sure its prices are not much higher than the prices of the other MNCs
(B)
MabHill should be sure its prices are not much lower than the prices of the other MNCs
(C)
Dumping doesn’t apply when there is no local manufacturing
(D)
Dumping doesn’t apply to B2B marketing
48
Taberet, a German company, has an Argentine marketing subsidiary that complains that
export price escalation makes Taberet products too expensive to sell in Argentina. The
subsidiary wants Taberet to adjust the transfer price to Argentina. What should Taberet
do about the transfer price?
(A)
Decrease it. Transportation costs will decrease
(B)
Decrease it. Tariff costs will decrease
(C)
Decrease it. Transport and tariff costs will both decrease
(D)
Do nothing. Transfer prices do not affect either transport or tariff costs
49
Indopharm has a Bulgarian marketing subsidiary that complains that export price
escalation makes the firm’s products too expensive to sell in Bulgaria. The subsidiary
wants the firm to adjust he transfer price to Bulgaria. What should Indopharm do about
the transfer price?
(A)
Increase it. Tariff costs will decrease
(B)
Decrease it. Tariff costs will decrease
(C)
Decrease it. Transportation costs will decrease
(D)
Do nothing. Transfer prices do not affect either transport or tariff costs
50
Swiss Pharmaceuticals has a Malaysian marketing subsidiary that complains that export
price escalation makes the firm’s products too expensive to sell in Malaysia. The
subsidiary wants Swiss Pharmaceuticals to lower the transfer price to Malaysia. Should
the firm lower the transfer price?
(A)
Yes. It will decrease transportation costs
(B)
No. International exhaustion laws forbid it
(C)
No. National exhaustion laws forbid it
(D)
None of the above
51
The government of Thailand is concerned that MNCs are adjusting transfer prices to their
Thai subsidiaries in order to decrease their income tax liability in Thailand. The Thai
government should
(A)
review increases in transfer prices
(B)
review decreases in transfer prices
(C)
initiate price controls
(D)
require forward pricing of all transfer prices
52
The government of Saudi Arabia is concerned that MNCs are adjusting transfer prices to
their Saudi subsidiaries in order to decrease tariff payments in Saudi Arabia. The Saudi
government should
(A)
review increases in transfer prices
(B)
review decreases in transfer prices
(C)
initiate price controls
(D)
require forward pricing of all transfer prices
53
The government of Saudi Arabia is concerned that MNCs are adjusting transfer prices to
their Saudi subsidiaries in order to decrease their income tax liability in Saudi Arabia. The
Saudi government should
(A)
require spot pricing of all transfer prices
(B)
require forward pricing of all transfer prices
(C)
review increases in transfer prices
(D)
review decreases in transfer prices
54
The government of Indonesia is concerned that MNCs are adjusting transfer prices to their
Indonesian subsidiaries in order to decrease tariff payments in Indonesia. The Indonesian
government should
(A)
review increases in transfer prices
(B)
review decreases in transfer prices
(C)
require spot pricing on all transfer prices
(D)
require forward pricing of all transfer prices
55
Latin Shoes wants to shut down parallel imports into the Egyptian market. Why might this
be difficult to do?
(A)
Egypt applies the national exhaustion principle
(B)
Egypt applies the international exhaustion principle
(C)
Shoes cannot be trademarked
(D)
None of the above
56
When the selling company guarantees to use some products or services from the buying
country in the final product, it is known as a(n) ^___^ deal.
57
Thai consumers are more likely than Americans to infer product quality from price
because
(A)
Thais rate themselves lower on product knowledge.
(B)
Thais have less money to spend.
(C)
Thais belong to a collectivist culture.