Chapter 9

Which of the following statements is true about MDCs (more-developed countries)? A. These countries are just entering world trade. B. Majority of their populations stay in rural areas. C. These countries have high per capita incomes. D. These countries have little world trade involvement. E. These countries have mainly agrarian economies.

C. These countries have high per capita incomes. More-developed countries (MDCs) are industrialized countries with high per capita incomes. Examples include industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States.

More household money goes for _____ in emerging markets than in developed markets. A. housing B. durable goods C. food D. leisure E. education

C. food

Bahamas is a member of _____. A. CARICOM B. NAFTA C. CFTA D. LAIA E. Mercosur

A. CARICOM

Which is the comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States that includes a wide array of tariff reductions aimed at increasing trade and employment? A. DR-CAFTA B. NAFTA C. CFTA D. SAARC E. Mercosur

A. DR-CAFTA

Which of the following is true about the present state of foreign businesses in most developing countries? A. Foreign investors are seen as vital partners in economic development. B. Today, most developing countries have more conservative attitudes toward foreign investments than before. C. Foreign firms are expropriated and charged with excessively high tariffs and quotas by all developing countries. D. Foreign businesses are not allowed to raise money by means of shares in developing countries. E. Foreign investment is banned in most developing countries.

A. Foreign investors are seen as vital partners in economic development. Today, foreign investors are seen as vital partners in economic development. Many countries have deregulated industry, opened their doors to foreign investment, lowered trade barriers, and begun privatizing SOEs.

Identify the substage in the evolution of the marketing process when the only marketing functions performed are demand creation and physical distribution. A. Mass production B. Global distribution C. Self-sufficient D. Surplus commodity product E. Small scale

A. Mass production According to the evolution of the marketing process, when the only marketing functions performed are demand creation and physical distribution, the marketing process is in a substage known as mass production. Refer to Exhibit 9.4-Evolution of the Marketing Process

Which of the following countries has 100 percent literacy rate? A. Mexico B. Canada C. Colombia D. Argentina E. Peru

B. Canada Canada and the U.S. have 100 percent literacy rate. Refer to Exhibit 9.3-Infrastructure of Most Populous American Countries.

Which of the following countries is a member of the Latin American Integration Association (LAIA, aka ALADI)? A. Bahamas B. Cuba C. Nicaragua D. Costa Rica E. Honduras

B. Cuba

Which of the following is considered as the single most important environmental element of a country to which the foreign marketer must adjust the marketing task? A. Political stability B. Economic level C. Social norms D. Literacy level E. Cultural orientation

B. Economic level The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country, and the entire marketing process

Which of the following is true of privatization of state-owned enterprises? A. It leads to a decline in productivity throughout the private sector. B. It was done in order to stop the drain on national budgets due to inefficient state-owned enterprises. C. It blocks capital mobility to strategic areas. D. It leads to a change in political leadership. E. It acts as a set back to the process of modernization.

B. It was done in order to stop the drain on national budgets due to inefficient state-owned enterprises Privatization releases immediate capital to invest in strategic areas and gives relief from a continuing drain on future national resources. Privatization of state-owned enterprises (SOEs) helped to prevent the drain on national budgets.

_____ is an economy's arbitrator between productive capacity and consumer demand. A. Warehousing B. Marketing C. Convergence D. Procurement E. Outsourcing

B. Marketing is an economy's arbitrator between productive capacity and consumer demand. The marketing process is the critical element in effectively utilizing production resulting from economic growth; it can create a balance between higher production and higher consumption.

Which of the following treaties provided the legal basis for Mercosur? A. The Treaty of Verdun B. The Treaty of Asunción C. The Treaty of Westphalia D. The Treaty of Versailles E. The Treaty of Montevideo

B. The Treaty of Asunción The Treaty of Asunción, which provided the legal basis for Mercosur, was signed in 1991 and formally inaugurated in 1995.

Which of the following kinds of market sectors is also known as the "new middle class"? A. The traditional sector B. The modern sector C. The rural services sector D. The transitional sector E. The agricultural sector

B. The modern sector (1) the traditional rural/agricultural sector, (2) the modern urban/high-income sector, and (3) the often very large transitional sector. The modern urban/high income sector is also referred to as the "new middle class."

Alexia is geographically large and represents a sizable market for a wide range of products. It has a strong growth rate and is considered as the regional economic driver. Based on this information, Alexia can be classified as a _____. A. grey market B. big emerging market C. two-sided market D. frontier market E. niche market

B. big emerging market

Markets that are geographically large, have strong growth rates, are regional economic drivers, and represent sizable markets for a wide range of products are known as _____. A. frontier markets B. big emerging markets C. two-sided markets D. niche markets E. grey markets

B. big emerging markets Big emerging markets share a number of important traits. They are all geographically large, have significant populations, represent sizable markets for a wide range of products, and have strong rates of growth or the potential for significant growth.

According to the evolution of the marketing process, when the only marketing functions performed are demand creation, physical distribution, and market information analysis, the marketing process is in the _____ substage. A. mass production B. commercial-transition C. self-sufficient D. surplus commodity product E. small scale

B. commercial-transition pg273 According to the evolution of the marketing process, when the only marketing functions performed are demand creation, physical distribution, and market information analysis, the marketing process is in a substage known as commercial-transition. Refer to Exhibit 9.4-Evolution of the Marketing Process.

Dynamic economies differ from static economies in that dynamic economies: A. need not match marketing efforts with the market needs and wants. B. have rapidly changing consumption patterns. C. have a highly predictable and loyal consumer base. D. define marketing as typically nothing more than a supply effort. E. do not require a marketer to be prepared for economic shifts and emerging markets.

B. have rapidly changing consumption patterns. In a dynamic economy, consumption patterns change rapidly. Marketing constantly faces the challenge of detecting and providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants.

According to the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, a country that is industrially underdeveloped, agrarian, has subsistence society with rural populations, and has extremely low per capita income levels falls under the category of _____. A. first world countries B. least-developed countries C. less-developed countries D. newly industrialized countries E. frontier markets

B. least-developed countries The least-developed countries (LLDCs) are industrially underdeveloped and agrarian. These countries have extremely low per capita income levels.

During the early market growth of many countries, the first large open market was _____. A. Russia B. the United States C. Australia D. Germany E. the United Kingdom

B. the United States During the early growth of many countries, the first large open market was the United States, later joined by Europe and now, as the fundamental principles of the World Trade Organization (WTO) are put into place, by much of the rest of the world.

Which of the following countries was involved in the formation of the free trade group Mercosur? A. Australia B. China C. Argentina D. Russia E. Thailand

C. Argentina Mercosur is the free trade group formed by Argentina, Brazil, Paraguay, and Uruguay.

The success of the Caribbean Free Trade Association led to the creation of the _____. A. Central American Integration System B. Community of Latin American and Caribbean States C. Caribbean Community and Common Market D. Union of South American Nations E. United Nations Economic Commission for Latin America and the Caribbean

C. Caribbean Community and Common Market The success of the Caribbean Free Trade Association led to the creation of the Caribbean Community and Common Market.

Which of the following is NOT a factor that has contributed to the rapid economic growth of NICs (newly industrialized countries)? A. Political stability B. Well-established economic and legal reforms C. Decrease in labor population D. Outward orientation E. Entrepreneurship

C. Decrease in labor population Political stability, well-established economic and legal reforms, outward orientation, and entrepreneurship are factors behind the remarkable success of NICs.

Which of the following is an indicator of economic development? A. Population expansion B. Expanding state ownership C. Extent of social overhead capital D. Social reformation E. Cultural diversity

C. Extent of social overhead capital One indicator of economic development is the extent of social overhead capital, or infrastructure, within the economy.

Which of the following is a fully industrialized country? A. Brazil B. Russia C. Germany D. Argentina E. Vietnam

C. Germany is a fully industrialized country. The United Nations classifies a country's stage of economic development on the basis of its level of industrialization.

Which of the following is a characteristic feature of privatization of state-owned enterprises? A. It normally has a negative effect on economic growth. B. It blocks investment of capital in strategic areas. C. It often leads to modernization. D. It results in a draining of the future national resources. E. It brings about a political shift in the country.

C. It often leads to modernization. Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth.

_____ is a free trade group formed by Argentina, Brazil, Paraguay, and Uruguay. A. NAFTA B. Caricom C. Mercosur D. SACU E. DR-CAFTA

C. Mercosur

Which country announced that it would seek free trade with the United States immediately after the ratification of the United States-Canada Free Trade Area (CFTA)? A. Germany B. Australia C. Mexico D. The United Kingdom E. China

C. Mexico Shortly after both countries had ratified the CFTA, Mexico announced that it would seek free trade with the United States.

According to the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, which category does an industrialized country with high per capita income fall under? A. Less-developed countries B. Least-developed countries C. More-developed countries D. Frontier markets E. Pre-emerging markets

C. More-developed countries Industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States fall into the category of more-developed countries.

Which of the following key provisions of NAFTA restricts Japan from assembling autos in Mexico and avoiding U.S. or Canadian tariffs and quotas, unless the auto had a specific percentage of Mexican (i.e., North American) content? A. Services B. Standards C. Rules of origin D. Uniform customs procedures E. Government procurement

C. Rules of origin According to rules of origin, for goods to be traded duty free, they must contain substantial (62.5 percent) North American content. Refer to Exhibit 9.6-Key Provisions of NAFTA.

Which of the following countries is a part of the free trade area known as CFTA? A. France B. Uruguay C. The United States D. Argentina E. Brazil

C. The United States To further support trade activity, the United States and Canada established the United States-Canada Free Trade Area (CFTA), designed to eliminate all trade barriers between the two countries.

CARICOM established the CSME (CARICOM Single Market and Economy) with the major goal of: A. establishing central institutions similar to those of the European Union institutions. B. forming a political union. C. implementing a common currency for all member nations. D. increasing nontariff barriers. E. implementing uniform customs procedures.

C. implementing a common currency for all member nations. CARICOM has worked toward a single-market economy and in 2000 established the CSME (CARICOM Single Market and Economy) with the goal of a common currency for all members. The introduction of a common external tariff structure was a major step toward that goal.

Paved roads, railroads, seaports, communication networks, and financial networks are illustrations of _____. A. environmental resources B. inventory C. infrastructure D. factors of production E. freight claims

C. infrastructure Infrastructure represents those types of capital goods that serve the activities of many industries. Included in a country's infrastructure are paved roads, railroads, seaports, communication networks, financial networks, and energy supplies and distribution—all necessary to support production and marketing.

According to the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, _____ consist of industrially developing countries just entering world trade with relatively low per capita income. A. first world countries B. least-developed countries C. less-developed countries D. Third World countries E. more-developed countries

C. less-developed countries Less-developed countries are industrially developing countries just entering world trade and have relatively low per capita incomes.

The marketing process in the U.S between 1885 and 1914 mainly focused on _____. A. mass distribution B. self-sufficiency C. mass production D. surplus commodity product E. commercial-transition

C. mass production According to the evolution of the marketing process, between 1885 and 1914, the marketing process in the U.S. is said to be characterized by mass production. In this stage, the marketing functions performed are demand creation and physical distribution. Refer to Exhibit 9.4-Evolution of the Marketing Process.

According to the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, Canada falls under the category of _____. A. Third World countries B. least-developed countries C. more-developed countries D. less-developed countries E. pre-emerging countries

C. more-developed countries Industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States are classified as MDCs (more-developed countries).

When countries sell off state-owned enterprises and privatize them, it usually results in a(n): A. lack of accommodation of outside investors. B. decline in productivity throughout the private sector. C. release of capital to invest in strategic areas. D. instant change in political leadership. E. continuing drain on future natural resources.

C. release of capital to invest in strategic areas. Privatization releases immediate capital to invest in strategic areas and gives relief from a continuing drain on future national resources.

The long-term goal of the LAIA (Latin American Integration Association), better known by its Spanish acronym, ALADI, is: A. to improve the literacy levels in member countries. B. to reduce the child mortality rates in member countries. C. to establish a Latin American common market. D. to establish a common currency for all its member countries. E. to standardize the industrial production in the member countries.

C. to establish a Latin American common market.

Mercosur is a free trade group formed by the United States of America.

FALSE free trade group formed by Argentina, Brazil, Paraguay, and Uruguay.

The newly industrialized countries have per capita incomes lower than LDCs.

FALSE These countries have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries.

Considering the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, Brazil falls under the group of more-developed countries (MDCs).

FALSE is an NIC

According to the UN classification, industrially developing countries just entering world trade with relatively low per capita incomes are referred to as more-developed countries.

FALSE many in Asia or Latin America are classified as less-developed countries

Economic growth is measured solely in economic goals.

FALSE not solely in economic goals but also in social achievements.

Brazil is a fully industrialized country.

FALSE Brazil is considered as a rapidly industrializing country.

In static economies, consumption patterns change rapidly.

FALSE In static economies, consumption patterns become rigid, and marketing is typically nothing more than a SUPPLY effort. In a dynamic economy, consumption patterns change rapidly.

High transaction costs associated with the use of the Internet prevents smaller firms in emerging countries from selling into a global market.

FALSE Lower transaction costs associated with the use of the Internet enable small firms in Asia or Latin America to work together to develop a global reach. Smaller firms in emerging economies can now sell into a global market.

Mercosur is the largest common-market agreement in the Americas.

FALSE Mercosur is the second-largest common-market agreement in the Americas after NAFTA.

The Mercosur envisioned central institutions similar to those of the European Union institutions.

FALSE Mercosur members were concerned about sacrificing sovereign control over taxes and other policy matters; hence the agreement envisioned no central institutions similar to those of the European Union institutions.

The United States-Canada Free Trade Area (CFTA) was a customs union like the European Community.

FALSE The agreement between the United States and Canada was not a customs union like the European Community; no economic or political union of any kind was involved. It provided only for the elimination of tariffs and other trade barriers.

The level of political stability in a country is the single most important environmental element to which the foreign marketer must adjust the marketing task.

FALSE The economic level of a country is the single most important

The marketing process substage in the United States economy from 1950 to the present is mass production.

FALSE The marketing process in the United States economy from 1950 to the present is said to be in a substage known as mass distribution.

The more developed an economy, the lesser the variety of marketing functions demanded.

FALSE The more developed an economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions.

Uruguay is a member of NAFTA.

FALSE The three members of NAFTA are the United States, Canada, and Mexico.

When the marketing process in a country is in the commercial-transition substage, the only marketing function performed is physical distribution.

FALSE When the marketing process in a country is in the commercial-transition substage, the marketing functions performed are demand creation, physical distribution, and market information analysis.

Newly industrialized countries (NICs) are characterized by markets free from restrictive trade practices and the presence of significant free market reforms.

TRUE Newly industrialized countries (NICs) have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries. They have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment.

The liberalization of trade and investment policies in developing countries are changing the way countries will trade and prosper in the 21st century.

TRUE The transition from socialist to market-driven economies, the liberalization of trade and investment policies in developing countries, the transfer of public-sector enterprises to the private sector, and the rapid development of regional market alliances are changing the way countries will trade and prosper in the 21st century.

As a country develops, market behavior changes and eventually it leads to market segmentation.

TRUE As a country develops, incomes change, population concentrations shift, expectations for a better life adjust to higher standards, new infrastructures evolve, and social capital investments are made. Market behavior changes, and eventually groups of consumers with common tastes and needs (i.e., market segments) arise.

Big emerging markets are of major political importance within their regions.

TRUE Big emerging markets have undertaken significant programs of economic reform and are of major political importance within their regions.

Economic development means rapid economic growth and increases in consumer demand

TRUE Economic development, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand—improvements achieved "in decades rather than centuries."

The trend toward privatization is currently a major economic phenomenon in industrialized as well as in developing countries.

TRUE Many countries have deregulated industry, opened their doors to foreign investment, lowered trade barriers, and begun privatizing SOEs. The trend toward privatization is currently a major economic phenomenon in industrialized as well as in developing countries.

One of the most important aspects of LAIA that differs from LAFTA is the differential treatment of member countries according to their level of economic development.

TRUE One of the most important aspects of LAIA that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development.

The DR-CAFTA includes a wide array of tariff reductions aimed at increasing trade and employment.

TRUE The DR-CAFTA includes a wide array of tariff reductions aimed at increasing trade and employment among the seven signatories. Thus, it represents another important step toward the ultimate goal of a free trade agreement encompassing all the Americas

The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world.

TRUE The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world. Also, many countries that are classified as LDCs are industrializing at a very rapid rate, whereas others are advancing at more traditional rates of economic development.

The quality of an infrastructure directly affects a country's economic growth potential.

TRUE The quality of an infrastructure directly affects a country's economic growth potential and the ability of an enterprise to engage effectively in business. Infrastructure is a crucial component of the uncontrollable elements facing marketers.

What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe.

TRUE What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe. As Europe rebuilt its infrastructure and industrial base, demand for capital goods exploded; as more money was infused into its economies, consumer demand also increased rapidly.

When the only marketing functions performed are demand creation and physical distribution, the marketing process is said to be in the mass distribution substage.

TRUE When the only marketing functions performed are demand creation and physical distribution, the marketing process is said to be in the mass production substage. Refer to Exhibit 9.4-Evolution of the Marketing Process.

Privatization of industries released immediate capital to invest in strategic areas.

True Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth.

Among three kinds of distances that international marketers must traverse, time zones have the greatest influence on the success of their commercial efforts abroad.

True miles, time zones, and cultural distances—time zones have the greatest influence on the success of their commercial efforts abroad.

Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result, these countries have: A. attracted both trade and foreign direct investment. B. become poor importers as well as exporters. C. experienced low gross national income. D. stepped up their protectionist policies. E. majorly given up on their domestic markets.

A. attracted both trade and foreign direct investment Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized countries (NICs). They have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment.

Estimating market potential in less-developed countries involves additional challenges, but most of the difficulty arises from the _____. A. coexistence of three distinct kinds of markets in each country B. dependence of the markets on the industrialized sectors C. lower wage rates of the workforce D. high fluctuation in the currency rate E. higher concentration of population residing in the urban areas

A. coexistence of three distinct kinds of markets in each country Most of the difficulty arises from the coexistence of three distinct kinds of markets in each country: (1) the traditional rural/agricultural sector, (2) the modern urban/high-income sector, and (3) the often very large transitional sector usually represented by low-income urban slums.

The United Nations' classification of stages of economic development has been mainly criticized because: A. it no longer seems relevant in the rapidly industrializing world. B. countries classified as LLDCs are growing at a very rapid rate. C. It no longer takes into account social overhead capital as an indicator of economic development. D. it only focuses on the literacy level in a country. E. countries that are classified as LDCs are industrializing at a slow rate.

A. it no longer seems relevant in the rapidly industrializing world. The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world. Many countries that are classified as LDCs are industrializing at a very rapid rate, whereas others are advancing at more traditional rates of economic development.

Economic planners are often more _____ oriented than marketing oriented. A. production B. advertising C. logistics D. theory E. distribution

A. production Economic planners frequently are more production oriented than marketing oriented and tend to ignore or regard distribution as an inferior economic activity.

A market in which the only marketing function performed is exchange is most likely to be classified under the _____ stage. A. surplus commodity product B. commercial-transition C. mass production D. mass distribution E. self-sufficient

A. surplus commodity product According to the evolution of the marketing process, between 1885 and 1914, the marketing process in the U.S. is said to be characterized by mass production. In this stage, the marketing functions performed are demand creation and physical distribution.

One of the most important aspects of LAIA that differs from LAFTA, its predecessor, is: A. the differential treatment of member countries according to their level of economic development. B. the inclusion of rules of origin. C. the exclusion of tariff barrier. D. that members are forbidden from establishing bilateral trade agreements among member countries. E. the introduction of a common currency for the member countries.

A. the differential treatment of member countries according to their level of economic development.

All of the following are traits of big emerging markets (BEMs) EXCEPT: A. they import less than smaller markets. B. they are all physically large. C. they have significant populations. D. they are regional economic drivers. E. they are of major political importance within their regions.

A. they import less than smaller markets. The BEMs differ from other developing countries in that they import more than smaller markets and more than economies of similar size.

Which of the following countries is a member of the free trade agreement DR-CAFTA? A. Bahrain B. Bhutan C. Morocco D. Costa Rica E. Oman

D. Costa Rica In August 2005, President George Bush signed into law a comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. This free trade agreement is known as DR-CAFTA.

_____ refers to an increase in national production that is reflected by an increase in the average per capita gross domestic product (GDP) or gross national income (GNI). A. Economic repression B. Economic duress C. Economic equilibrium D. Economic development E. Economic sustainability

D. Economic Development Economic development is generally understood to mean an increase in national production reflected by an increase in the average per capita gross domestic product (GDP) or gross national income (GNI).

What is happening in BEMs today is analogous to what happened in: A. Saudi Arabia in the 1800s. B. India during the rule of the British Empire. C. Russia after the fall of the Czar. D. Europe after World War II. E. Iraq between 1890 and 1990.

D. Europe after World War II. BEMs lack modern infrastructure, much of the expected growth will be in industrial sectors such as information technology, environmental technology, and financial services. What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe.

Which of the following countries has been identified by the Department of Commerce as a BEM (big emerging market)? A. Philippines B. Egypt C. Venezuela D. Mexico E. Nicaragua

D. Mexico India, China, Brazil, Mexico, Poland, Turkey, and South Africa are prominent examples of countries the Department of Commerce has identified as BEMs. Other countries such as Egypt, Venezuela, and Colombia may warrant inclusion in the near future.

_____ required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped. A. Mercosur B. LAIA C. CARICOM D. NAFTA E. DR-CFTA

D. NAFTA NAFTA required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped

Which of the following is true of state ownership? A. Privatization of state-owned enterprises blocked the release of immediate capital to invest in strategic areas. B. State ownership is the most ideal engine for economic growth. C. Privatization of state-owned enterprises continually drained the future national resources. D. State ownership has resulted in complicated and unpredictable regulatory environments. E. State ownership has consistently resulted in the inclusion of foreign and domestic private ownership, and the formation of efficient public companies.

D. State ownership has resulted in complicated and unpredictable regulatory environments.

Which of the following statements is true about the Internet? A. The Internet further increases the advantage of rich economies over the poor ones. B. The Internet increases market transaction costs. C. The Internet allows for innovative services but at a relatively higher cost. D. The Internet enables smaller firms in emerging economies to sell into a global market. E. The Internet decreases the economies of scale from vertical integration.

D. The Internet enables smaller firms in emerging economies to sell into a global market. Lower transaction costs enable small firms in Asia or Latin America to work together to develop a global reach. The Internet has enabled smaller firms in emerging economies can now sell into a global market.

_____ classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MIDCs, LDCs, and LLDCs. A. The U.S. Department of Commerce B. The North Atlantic Treaty Organization C. The International Organization for Standardization D. The United Nations E. The International Development Association

D. The United Nations classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MIDCs, LDCs, and LLDCs.

NAFTA differs from Mercosur in that NAFTA: A. was provided legal basis by the Treaty of Asunción. B. is the second-largest common-market agreement in the Americas after Mercosur. C. includes Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay. D. aims to address and improve all aspects of doing business within North America. E. aims to establish a common currency for its Latin American members.

D. aims to address and improve all aspects of doing business within North America.

Economic planners are most likely to be least concerned with the problems related to _____. A. production B. finance C. expenditure D. distribution E. investment

D. distribution Given such attitudes, economic planners generally are more concerned with the problems of production, investment, and finance than the problems of efficiency of distribution.

When the marketing process is characterized by mass distribution, all of the following marketing functions are performed EXCEPT _____. A. demand creation B. market information analysis C. physical distribution D. exchange E. market and product planning, development

D. exchange When the marketing process is characterized by mass distribution, the marketing functions performed are demand creation, market information analysis, physical distribution, and market and product planning, development. It does not involve exchange. Refer to Exhibit 9.4-Evolution of the Marketing Process.

Newly industrialized countries (NICs) differ from less-developed countries in that NICs: A. include Canada, the United States, and Germany. B. attract insignificant or no foreign investment. C. have per capita incomes that are lower than other developing countries. D. have moved away from restrictive trade practices and instituted significant free market reforms. E. have shown slow industrialization and expansion of targeted industries.

D. have moved away from restrictive trade practices and instituted significant free market reforms. Newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment.

Given the fact that NAFTA is now effective among the U.S., Mexico, and Canada, an American company which has its production plant in Sri Lanka will be willing to relocate its production plant to Mexico mostly because: A. it will improve the image of its goods. B. Mexico has lower wages than Sri Lanka. C. it will enable the company to get an entirely western consumer base for its products. D. moving goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka. E. workers in Mexico are more skilled than those in Sri Lanka.

D. moving goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka.

Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are examples of _____ countries. A. least-developed B. Third World C. underdeveloped D. newly industrialized E. closed economy

D. newly industrialized Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized countries (NICs). Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are some of the countries that fit this description.

Which of the following accounts for the lion's share of Mercosur exports to Europe? A. Clothing and apparel B. Telecommunication equipment C. Consumer durables D. Petroleum and minerals E. Agricultural and agro-industrial products

E. Agricultural and agro-industrial products

The three members of the North American Free Trade Agreement (NAFTA) are: A. the United States, the United Kingdom, and France. B. the United States, Cuba, and Uruguay. C. Canada, China, and Japan. D. the United States, France, and Germany. E. Canada, Mexico, and the United States.

E. Canada, Mexico, and the United States.

All of the following statements are true about Mercosur EXCEPT that: A. it is the second-largest common-market agreement in the Americas after NAFTA. B. the Treaty of Asunción provided the legal basis for Mercosur. C. it is the most influential and successful free trade area in South America. D. Mexico has observer status in Mercosur. E. Germany is a member of Mercosur.

E. Germany is a member of Mercosur.

Which of the following countries is NOT a member of the Caribbean Community and Common Market (CARICOM)? A. Barbados B. Dominica C. Grenada D. Jamaica E. Guatemala

E. Guatemala

In the context of Latin American trade progress, which of the following was a result of state ownership? A. Inclusion of foreign and domestic private ownership B. Efficient state treasuries C. Efficient public companies D. Predictable regulatory environments E. Inflated public-sector bureaucracies

E. Inflated public-sector bureaucracies State ownership was once considered the ideal engine for economic growth. Instead of economic growth, however, they ended up with inflated public-sector bureaucracies, complicated and unpredictable regulatory environments, the outright exclusion of foreign and domestic private ownership, and inefficient public companies.

Which of the following is true of the CFTA? A. It was designed to establish similar literacy levels in North American states. B. It created several independent commercial markets for goods and services. C. It was a customs union like the European Community. D. It involved both economic and political unions. E. It provided only for the elimination of tariffs and other trade barriers between the United States and Canada.

E. It provided only for the elimination of tariffs and other trade barriers between the United States and Canada.

Which of the following statements is true about NAFTA? A. It allows the use of standards and technical regulations as obstacles to trade. B. It was ratified and became effective in the year 2000. C. It prohibits U.S. and Canadian financial institutions to open wholly owned subsidiaries in Mexico. D. Its provisions require goods to contain minimum of 10% North American content to be traded duty free. E. Its provisions require Canada, Mexico, and the United States to implement uniform customs procedures and regulations.

E. Its provisions require Canada, Mexico, and the United States to implement uniform customs procedures and regulations. NAFTA provisions on services state that both U.S. and Canadian financial institutions are permitted to open wholly owned subsidiaries in Mexico, and all restrictions on the services they offer will be lifted. Refer to Exhibit 9.6-Key Provisions of NAFTA.

Which of the following substages best characterizes the United States today with respect to the evolution of the marketing process? A. Mass production B. Commercial-transition C. Self-sufficiency D. Surplus commodity product E. Mass distribution

E. Mass distribution The marketing process in the U.S. today is said to be characterized by mass distribution. The marketing functions which take place at this stage are demand creation, physical distribution, market information, market and product planning, and development. Refer to Exhibit 9.4-Evolution of the Marketing Process.

In the context of the evolution of the marketing process, which of the following would be considered to be the most fundamental substage (first substage)? A. Surplus commodity product B. Commercial-transition C. Mass production D. Mass distribution E. Self-sufficient

E. Self-sufficient The first stage in the evolution of the marketing process is the "agricultural and raw materials" stage, and its first substage is "self-sufficient." If a country is primarily dominated by nomadic or hunting tribes, the marketing process in the country will be in the "self-sufficient" substage. Refer to Exhibit 9.4-Evolution of the Marketing Process.

Which of the following is NOT one of the factors directly changing the way countries trade and prosper in the twenty-first century? A. The transition from socialist to market-driven economies B. Liberalization of trade and investment policies in developing countries C. The transfer of public-sector enterprises to the private sector D. The rapid development of regional market alliances E. The increase in military capabilities of countries around the world

E. The increase in military capabilities of countries around the world The transition from socialist to market-driven economies, the liberalization of trade and investment policies in developing countries, the transfer of public-sector enterprises to the private sector, and the rapid development of regional market alliances are changing the way countries will trade and prosper in the 21st century.

The transitional sector differs from the modern urban sector in that the transitional sector: A. is an exclusively agriculture-oriented sector. B. consists of population that works in the country side. C. consists of an expanding Westernized middle class. D. represents the high-income urban slums. E. consists of population that moves from the country to the large cities.

E. consists of population that moves from the country to the large cities. Directly juxtaposed to the modern sector, the transitional sector contains those moving from the country to the large cities. It is usually represented by low-income urban slums

The level of market development roughly parallels the stages of _____. A. economic stagnation B. economic duress C. economic repression D. economic equilibrium E. economic development

E. economic development