COMP 2

Which of the following is true of a pure market economy? a. All factors of production are privately owned. b. Its policies are based on religious decree. c. All factors of production are owned by the government. d. It has elements of both a market economy and a command economy.

a. All factors of production are privately owned.

Which of the following is true of the Washington Consensus? a. It advocated the superiority of private ownership over state ownership. b. It provided measures that governments can take in order to move toward a command economy. c. It listed the bail out procedures that governments could follow in case of a firm's bankruptcy. d. It advocated more governmental control in trade.

a. It advocated the superiority of private ownership over state ownership.

Which of the following is true of the common law system? a. It has spread to all English-speaking countries and their (former) colonies. b. It does not allow interpretations of the law by judges. c. It is the oldest legal system in the world. d. It bases its legal judgment primarily on the dominant religion of the country.

a. It has spread to all English-speaking countries and their (former) colonies.

Which of the following would be considered an example of formal institutions? a. Laws b. Ethics c. Norms d. Cultures

a. Laws

Which of the following is the argument used by proponents of the "cultural" explanation for the difference in economic development across the globe? a. That rich countries have a smarter and harder-working population b. That rich countries generally tend to have a democratic style of government c. That rich countries tend to be endowed with natural resources d. That rich countries tend to have better market-supporting institutions

a. That rich countries have a smarter and harder-working population

The _____ refers to the coercive power of governments. a. regulatory pillar b. informal pillar c. normative pillar d. cognitive pillar

a. regulatory pillar

In which of the following examples can the role of the cognitive pillar be identified? a. A firm being punished for corporate espionage by the courts b. A firm not being able to sell a certain product in a country due to the prevalent cultural beliefs c. A firm being exposed after one of its employees turned whistleblower d. A firm outsourcing its jobs

c. A firm being exposed after one of its employees turned whistleblower

Which of the following is true of a command economy? a. It strictly follows the doctrine of laissez faire. b. The government only performs those functions that the private sector cannot perform. c. It does not allow private entrepreneurship. d. All factors of production are privately owned.

c. It does not allow private entrepreneurship.

Which of the following is true of the civil law system? a. It is shaped by precedents and traditions from previous judicial decisions. b. It originated in England, and was then spread as the legal system for all its former colonies. c. It is the most widely distributed legal system around the world. d. It allows judges to interpret the law before making judicial decisions.

c. It is the most widely distributed legal system around the world.

For which of the following types of economies would the factors of production depend on the relative distribution of market forces versus command forces? a. Pure market economy b. Strict laissez faire economy c. Mixed economy d. Command economy

c. Mixed economy

Which of the following is a proposition of the institution-based view? a. Decisions based on bounded rationality should be avoided. b. Informal constraints always increases transaction costs for the firm. c. When formal constraints are unclear, informal constraints will play a larger role in reducing uncertainty and providing constancy to managers and firms. d. Dependency on informal constraints will always increase the political risks associated with a firm.

c. When formal constraints are unclear, informal constraints will play a larger role in reducing uncertainty and providing constancy to managers and firms.

Which of the following would be considered an example of intellectual property rights? a. Rights associated with ownership of vehicles b. Rights associated with ownership of buildings c. Rights associated with ownership of business contracts d. Rights associated with ownership of trademarks

d. Rights associated with ownership of trademarks

_____ refers to a legal system based on religious teachings. a. Common law b. Civil law c. Right-wing totalitarian law d. Theocratic law

d. Theocratic law

Which of the following is an example of an intellectual property? a. Scientist's laboratory b. Home c. Office d. Website

d. Website

The TRIPS system was designed to _____. a. create IP rights that adhered to the norms of individual countries b. force firms to enforce IP rights through an informal system c. make sure that firms follow theocratic laws d. force firms to innovate while strictly adhering to IPR guidelines

d. force firms to innovate while strictly adhering to IPR guidelines

The _____ view focuses on the dynamic interactions between the laws, cultures and ethics of a country and a firm, and considers firm behaviors as the outcome of such an interaction. a. competency-based b. resource-based c. internal strength-based d. institution-based

d. institution-based

Which of the following would be considered an example of informal institutions? a. Laws b. Ethics c. Regulations d. Rules

b. Ethics

Which of the following would be an example of a force majeure defense for a seller? a. If the seller decides to stop delivery out of fear of nonpayment b. If the goods to be delivered are destroyed in an earthquake c. If the customer has already accepted nonconforming goods d. If the seller places warranties on the goods

b. If the goods to be delivered are destroyed in an earthquake

Which of the following is true of private ownership? a. It allows financing only through nationalized banks. b. It tends to force firms into liquidation due to high competition. c. Its primary objective is protecting jobs and minimizing social unrest. d. It empowers the government to determine firm entry.

b. It tends to force firms into liquidation due to high competition.

_____ are legal rights awarded by government authorities to inventors of new products. a. Trade secrets b. Patents c. Trade marks d. Copyrights

b. Patents

Which of the following economies would be characterized as having a laissez faire policy? a. Command economy b. Pure market economy c. Socialist economy d. Mixed economy

b. Pure market economy

_____ are exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others. a. Copyrights b. Trademarks c. Patents d. Trade secrets

b. Trademarks

The _____ refers to the internalized, taken for granted values and beliefs that guide individual and firm behavior. a. regulatory pillar b. cognitive pillar c. formal pillar d. normative pillar

b. cognitive pillar

A fundamental aspect of _____ is that it effectively conducts global business by providing an individual the right to freedom of expression and organization. a. communist totalitarianism b. democracy c. right-wing totalitarianism d. theocracy

b. democracy

Intellectual property specifically refers to _____ property. a. tangible b. intangible c. real d. moveable

b. intangible

Private ownership differs from state ownership in that in private ownership _____. a. establishing a firm is determined by government officials and bureaucrats b. maximizing profits is the primary objective of a firm c. protecting jobs and minimizing social unrest is the primary objective of a firm d. failing firms deemed too big to fail may be supported by taxpayer money indefinitely

b. maximizing profits is the primary objective of a firm

State ownership differs from private ownership in that in state ownership _____. a. maximizing profits is the sole objective of a firm b. protecting jobs and minimizing social unrest is the objective of a firm c. management appointments are made by owners and investors based on merit d. managers' compensation is determined by competitive market forces

b. protecting jobs and minimizing social unrest is the objective of a firm

The key role of institutions is to _____ in business transactions. a. reduce resource costs b. reduce uncertainty c. increase normative limits d. increase opportunism

b. reduce uncertainty

In which of the following ways do formal institutions regulate trade? a. By imposing laws that make certain trades unacceptable b. By inducing uncodified ethical beliefs into society c. By allowing the cultural beliefs of a society to dictate the terms of trade d. By putting faith in individuals to expose perceived wrong doings

a. By imposing laws that make certain trades unacceptable

The main supportive pillars of the informal institutions are _____. a. normative and cognitive b. cognitive and regulatory c. regulatory, normative, and cognitive d. regulatory and normative

a. normative and cognitive

_____ are exclusive legal rights of authors and publishers to publish and disseminate their work. a. Trademarks b. Trade secrets c. Patents d. Copyrights

d. Copyrights

Which of the following is true of private ownership? a. Firm's objective would be to find a "fair" deal for all stakeholders. b. Management appointments are made by government officials and bureaucrats who may also use non-economic criteria. c. Firms deemed "too big to fail" may be supported by taxpayer dollars indefinitely. d. Firms are established by entrepreneurs, owners, and investors.

d. Firms are established by entrepreneurs, owners, and investors.

_____ is a long-standing legal doctrine that excuses firms from living up to the terms of a deal in the event of natural disasters or other calamities. a. De minimis b. Travaux préparatoires c. Nolo contendere d. Force majeure

d. Force majeure

_____ are represented by laws, regulations, and rules. a. Cognitive institutions b. Normative institutions c. Sociocultural institutions d. Formal institutions

d. Formal institutions

Which of the following is a feature of right-wing totalitarianism? a. It does not curtail an individual's right to freedom of expression and organization. b. It bases its economic policies on communist ideologies. c. It concentrates power in the hands of one or more religious groups. d. It does not allow room for political freedom.

d. It does not allow room for political freedom.