(D)
All of the above
58
Variable costs change directly with the volume of output.
(A)
True
(B)
False
59
An international transfer price is the price paid by the importing or buying unit of a firm to
the exporting unit of the same firm.
(A)
True
(B)
False
60
CIF refers to credit, insurance, and freight.
(A)
True
(B)
False
61
CIF refers to cost, insurance, and freight.
(A)
True
(B)
False
62
CIF refers to classified industrial freight.
(A)
True
(B)
False
63
CFR refers to cost, freight and return.
(A)
True
(B)
False
64
Free on board (FOB) designates that the seller is responsible for the costs of shipping and
insuring a purchased product.
(A)
True
(B)
False
65
Free on board (FOB) designates that the buyer is responsible for the costs of shipping and
insuring a purchased product.
(A)
True
(B)
False
66
Companies try to accumulate more profits in a high-tax country in order to help
governments increase tax revenue.
(A)
True
(B)
False
67
Governments often examine transfer prices carefully as they are often aimed at
supporting parallel imports.
(A)
True
(B)
False
68
When two currencies are involved, there is the risk that a change in exchange rates may
occur between the invoicing date and the settlement date for the transaction.
(A)
True
(B)
False
69
Parallel imports are the import of illegal products through legal channels.
(A)
True
(B)
False
70
Parallel imports hurt governments because they do not pay taxes.
(A)
True
(B)
False
71
Cell phone penetration in rural India was stymied by unreliable mail service.
(A)
True
(B)
False
72
Many antidumping cases brought to the WTO are brought by developing countries against
developed countries.
(A)
True
(B)
False
73
Many companies charge higher prices in foreign markets than in their domestic markets
because of transportation costs.
(A)
True
(B)
False
74
The WTO works with member countries to raise tariffs to protect their local industries.
(A)
True
(B)
False
75
High tariffs make exporters more competitive with local manufacturers.
(A)
True
(B)
False
76
Outside of the United States, many countries have longer distribution channels thereby
increasing channel costs.
(A)
True
(B)
False
77
In a market with few large buyers, prices are usually lower than in markets with many
small buyers.
(A)
True
(B)
False
78
In a market with few large buyers, prices are usually higher than in markets with many
small buyers.
(A)
True
(B)
False
79
A firm acting as the sole supplier of a product in a given market enjoys greater pricing
flexibility.
(A)
True
(B)
False
80
Websites in China encourage consumers to form buying teams to bargain for quantity
discount from retailers.
(A)
True
(B)
False
81
Foreign exchange fluctuations can affect a firm’s profitability forcing it to lower or raise
prices to maintain margins.
(A)
True
(B)
False
82
Price controls are usually temporary.
(A)
True
(B)
False
83
Across-the-board price controls are more common than industry-specific price controls.
(A)
True
(B)
False
84
Antidumping actions are allowed against firms if they sell at less than fair value and cause
material injury to a domestic industry.
(A)
True
(B)
False
85
Parallel imports are often supported by governments because they increase tax revenues
considerably.
(A)
True
(B)
False
86
Parallel imports are commonly used by MNCs to optimize global pricing.
(A)
True
(B)
False
87
Costs that do not vary over a given range of output are referred to as __________ costs.
(A)
variable
(B)
fixed
(C)
incremental
(D)
marginal
88
Tariffs are
(A)
levied on locally made products.
(B)
the same as sales taxes.
(C)
levied on the landed costs of an imported product.
(D)
levied on the final selling price of an imported product.
89
Reclassifying a product may be a way to
(A)
discourage parallel imports.
(B)
lessen tariffs costs.
(C)
lessen transportation costs.
(D)
encourage cartelling.
90
Sometimes firms attempt to avoid or lessen the cost effects of tariffs by
(A)
reclassifying their product.
(B)
increasing the VAT of their product.
(C)
parallel importing.
(D)
All of the above.
91
The European VAT is a form of
(A)
tariff.
(B)
quota.
(C)
sales tax.
(D)
“sin” tax.
92
Sweden’s joining of the EU helped to undermine its
(A)
alcohol taxes.
(B)
cigarette taxes.
(C)
VAT on digital products.
(D)
surtax on computers.
93
Channel costs are a function of
(A)
cost of raw materials.
(B)
sales taxes.
(C)
channel length, distribution margins, and logistics.
(D)
All of the above.
94
Young populations of Southeast Asia are an attractive target for companies because of
their __________ income.
(A)
low discretionary
(B)
high per-capita
(C)
low per-capita
(D)
high discretionary
95
The __________________of 20-somethings in Asia is increased because most still live
with their parents.
(A)
income
(B)
discretionary income
(C)
income taxes
(D)
None of the above
96
In Southeast Asia, consumers in their twenties have a very high discretionary income as a
percentage of total income compared to their U.S. counterparts because
(A)
they go to work in their teens.
(B)
they save more money.
(C)
they marry younger.
(D)
many still live with their parents.
97
In China, McDonald’s originally priced its hamburger below full costs in order to
(A)
compete with Burger King.
(B)
attract more customers.
(C)
comply with Chinese controls.
(D)
All of the above.
98
General Motors developed a Farmers Car because
(A)
rural Chinese have less income than urban Chinese.
(B)
farmers in India required a different product from urban Indians.
(C)
the World Bank subsidized the project.
(D)
the Indonesian government subsidized the project.
99
Global cartels help to decrease transportation costs.
(A)
True
(B)
False
100
Global cartels tend to raise prices to buyers.
(A)
True
(B)
False
101
National exhaustion provides that once a firm has sold its trademarked product in a
specific country, it cannot restrict the further distribution of that product in that country.
(A)
True
(B)
False
102
Firms can control parallel imports by reducing prices in higher priced markets and limiting
supplies to wholesalers in lower priced markets.
(A)
True
(B)
False
103
Countertrade is popular among customers who prefer to pay with hard currency.
(A)
True
(B)
False
104
Compensation transactions are typical for large governmental purchases, such as defense
projects, especially when a country wants to obtain some extra exports in exchange for
the awarding of a contract.
(A)
True
(B)
False
105
The offset deal is an example of a full compensation transaction.
(A)
True
(B)
False
106
Payment for new textile machinery with the output produced by the new machinery is an
example of a cooperation agreement.
(A)
True
(B)
False
107
Countertrade is complex and time consuming, and it is sometimes difficult to find a buyer
for the merchandise accepted as a part of a transaction.
(A)
True
(B)
False
108
Letters of credit are documents issued by financial institutions to assure exporters are
paid by their customers abroad.
(A)
True
(B)
False
109
Hedging is a way to manage transaction risk.
(A)
True
(B)
False
110
The EU follows the principle of regional exhaustion.
(A)
True
(B)
False
111
The EU follows the principle of international exhaustion.
(A)
True
(B)
False
112
A modified uniform pricing policy is designed to address export-price escalation.
(A)
True
(B)
False
113
Price levels in the United States are
(A)
set by cartels.
(B)
determined by agreements among competitors.
(C)
set by the U.S. Justice department.
(D)
set by the respective companies.