Business Chapter 3 review

Wamblee, a Central American country, requires red-tape-intensive licenses for all alcohol imports. In this scenario, which of the following types of trade restrictions does the country use?

A nontariff barrier

Which of the following countries exemplifies the concept of opportunity cost?

An Asian country that increases its production of sugar by decreasing its production of cocoa

In the context of the barriers to international trade, which of the following is the best way to jump over sociocultural barriers?

Conducting thorough customer research

In the context of international trade restrictions, a(n) _____ is a total ban on the international trade of a certain item.

Embargo

A firm that expands through foreign franchising is called a franchisee

False

In the context of competitive advantage, the value of the first-best choice represents the opportunity cost of producing a second product.

False

In the context of foreign direct investment, a joint venture involves the merger of companies

False

In the context of global trade, the exchange rate can directly measure global commerce.

False

Quotas are taxes levied against imports.

False

The financial assistance offered by the World Bank usually comes in the form of high-interest loans

False

_____ refers to the unrestricted movement of goods and services across international borders.

Free trade

In the context of emerging economies, which of the following statements is true of the BRIC countries?

India's subscriber base for cell phones has grown explosively over the past five years.

What type of agreements range from simple barter to a complex web of exchanges that ends up meeting the needs of multiple parties?

Individual countertrade agreements

In the context of global trade, which of the following statements is true of balance of payments?

It includes foreign borrowing and lending.

A country has an absolute advantage when it can produce more of a good than other nations, using the same amount of resources.

True

A firm that contracts with foreign producers has an obligation to ensure that those factories adhere to ethical standards.

True

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

True

Balance of payments includes financial flows such as foreign investments.

True

Balance of trade incorporates trade with all foreign nations.

True

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

True

Foreign licensing helps circumvent government restrictions on importing in closed markets.

True

Gabi, a European shoe manufacturing company, wants to import leather from Vadim, a South American country. However, the officials in charge of the trade in Gabi agree to formalize the transaction only if they are paid a certain amount of money for their personal benefit. Since European businesses are prohibited from offering bribes to any foreign nation, Gabi has to look to another exporter of leather. In the given scenario, Gabi is most likely facing the barrier of _____.

economic differences

In the context of global trade, the _____ is a measurement of the value of one nation's currency relative to the currency of other nations.

exchange rate

Trade restrictions were created to ________.

protect domestic industry

In the context of barriers to international trade, _____ include differences among countries in language, attitudes, and values

sociocultural differences

Taini and Edda start a ride share business together. They sign a legal contract that states that the business is owned by them. The agreement also states that they will have an equal share in the profits of the business and will be equally liable for any losses incurred by the business. This scenario exemplifies _____.

A partnership

The government of Tadahiro, a Central American country, learns that low-priced mineral imports from Oda, a European country, are affecting the sales of domestic textile companies. The Tadahiro government decides to levy a 7% tax on all mineral goods imported from other countries. In this scenario, which of the following trade restrictions does the Tadahiro government impose?

A tariff

Umi and Lali are Asian nations that have signed a trade agreement with each other. The agreement states that Umi will supply wheat to Lali, and Lali will supply sugarcane to Umi. The agreement will benefit both nations and will even out some of the resource imbalances in the two nations. In this scenario, which of the following is most likely to have influenced the trade agreement between Umi and Lali?

Access to factors of production

Verbage, a pharmaceutical company, exports its products to more than 30 countries around the world. Even though Verbage has reduced sales in one of these countries, the company is still able to maintain its overall profits. In the given scenario, which of the following is a reason behind Verbage's ability to maintain its overall profits?

Access to factors of production

In the context of international trade, which of the following companies is facing the barrier of legal differences?

An African company that can only import a limited amount of metal from an Arab country because of international trade restrictions

Companies that choose to export products to a foreign country spend more to enter that market than companies that choose to build their own factories

False

In the context of foreign direct investment, a partnership typically involves a less formal, less encompassing agreement than a strategic alliance.

False

In the context of strategies for reaching global markets, franchising is a strategy that can be used to seek foreign suppliers.

False

In the context of the strategies for reaching global markets, which of the following is a key risk of foreign outsourcing?

Implementation of quality control

Ragni Hotels, a hospitality company, has developed a secondary market for its services in a foreign country. This allows the company to minimize its losses when its primary market fails to generate enough revenue to benefit the company. In this scenario, which of the following is most likely to have influenced Ragni Hotels' decision to set up a market in another country?

Reduced risk

TimeTrack was the first smartphone company in the world to introduce dark mode on its phones. This feature soon became a major selling point for consumers all over the world. As a result, other smartphone companies began providing a similar feature in their phones. In this scenario, which of the following is most likely to have influenced other companies to include dark mode?

Reduced risk

In the context of barriers to international trade, infrastructural differences between two countries fall into the category of economic differences.

True

In the context of barriers to international trade, per capita income is a key factor that determines the economic differences between two countries.

True

In the context of international trade, often countries with the highest trade barriers have the least competition.

True

The balance of trade plays a central role in determining the balance of payments.

True

Which of the following describes a direct investment?

When firms develop new facilities from the ground up in foreign countries

Rubicon Inc., an American guitar manufacturing company, signs a contract with a supplier in Umreia, an Asian country, to manufacture guitars. Rubicon then imports these products and sells them in its markets under its own brand name. Rubicon does this because of the availability of cheap labor in Umreia, which substantially cuts down Rubicon's cost of production. In this scenario, Rubicon is most likely involved in _____.

foreign direct investment

Lali, an Eastern European country, has permitted Mabon, an Asian company, the rights to produce its products and to use the Lali trademark. However, Lali does not have the authority or the rights to dictate the business operations of Mabon. In this scenario, Mabon is the _____.

licensee

In the context of key economic considerations when entering a foreign market, the transportation infrastructure in a country most likely includes _____.

roads

In the late 1970s, LarceCo, a tea manufacturing company, entered the market of a developing country called Fantesnia. As there was a lack of hard currency in Fantesnia, LarceCo was involved in a barter system; it exchanged its tea-based products for the local vodka of Fantesnia. This scenario illustrates that LarceCo engaged in _____.

countertrade

Baki Corp., a technology company based in the country of Jaelle, contracts with a small-scale supplier in the country of Sadzi to manufacture its cellphones, wireless headphones, and phone cases that are sold across the world. This strategy by Baki Corp. illustrates _____.

foreign outsourcing

What is the term for buying products domestically that have been produced or grown in foreign nations?

importing

In the context of international trade, India, China, and the Philippines attract multibillion-dollar investments because ________.

they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers

Odele, a West African country, exported grain worth $700 million between 2018 and 2019 and imported sugarcane worth $840 million during the same period. In this scenario, Odele most likely had a _____ between 2018 and 2019.

trade deflict

The _____ is an international cooperative of 188-member countries, working together to reduce poverty in the developing world. a. World Ban

world bank