Chapter 6 IB
A country with exports of $6 million and other cash coming into the country of $3 million and imports of $5 million and other cash going out of the country of $3 million has a
favorable balance of payments
A purchase agreement should include all of the following details except
the amount of customs duty
When goods are exported to another company
the method of shipment varies depending on the product and other factors.
An industry that has many companies offering the same basic product, but with some slight difference is
monopolistic competition
It is unusual for a monopoly to occur without the influence of government or other businesses.
True
Items bought at a free-trade zone of an airport and then taken into the country are subject to the customs duties of that country.
True
Some goods have to be imported because they are only available from foreign stores.
True
The risk involved in importing is increased if you do not first determine whether there is any demand for the product you plan to import.
True
When exports are greater than imports there is a favorable balance of trade
True
Monopolistic competition occurs when a few large companies control an industry
False
The candy bar industry is an example of pure competition
False
The company with the best product is the most successful in the market
False
The purpose of a bill lading is to identify the country in which the goods were produced.
False
When food products are exported, they can usually be standardized for most countries.
False
When imported products ar ein high demand or are extremely perishable, water transport by ship is usually the best method of transportation.
False
When sales terms are described as cost and freight (C&F), this means that all costs of the goods, shipping, and insurance are included in the price.
False
A country's balance of payment is a better measure of international business then the balance of trade because it includes more exchanges with foreign resources.
True
A freight forwarder arranges the shipping of goods to customers in other countries.
True
A trade deficit occurs when imports are greater than exports
True
An importing business is involved in international business when it buys goods from other countries and then sells them in its own country.
True
An industry is a group of companies in the same type of business
True
An item you buy that is made in another country is an example of an import
True
Competition will usually improve the economic situation and living conditions of a nation
True
An industry that has a few large companies that control it is
an oligopoly
A certificate of origin is a document used in exporting that
may be used to determine the amount of import tax
Importing is important because of the following two reasons
Customers want the product and it is cheaper from another country
An unfavorable balance of payment occurs when a nation receives more money from international trade in one year than it pays out
False
Countertrade is a method of barter that never includes cash payments.
False
Custom officials sell imported products in government-owned stores.
False
Customs duties are always based on the value of the goods, not the quantity or weight.
False
Direct barter occurs when a company pays directly for imported goods.
False
Indirect exporting involves a company's export department selling to manufacturers in another country
False
It is usually easy to locate foreign suppliers who can provide the goods you want to import, when you need them.
False
Many U.S companies successfully export products to other companies, but exports of services are very rare.
False
Governments often place legal limits on the power of companies so that one dominant company cannot control a geographic area or portion of an economy.
True
Countertrade is
a method of avoiding payments in a currency with limited values.
Of the following business transactions, the only one that describes importing activity is
a retailer in Sweden receives goods from Mexico to sell in a chain of stores.
A company can have a competitive advantage if it
builds the best reputation for quality of all companies in the market
Products that do not usually require much modification for foreign customers include
clothing
Money given as a foreign aid to another country
decreases the balance of payments of the country make the payment
The major factors that affect the degree of competition are
number of companies, business costs, and product differences
A U.S company exported kitchen appliances to Italy without changing the appliances. Italians did not buy the appliances because they would not work with the way Italian electricity current is supplied to households. The step in the exporting process the exporter did not properly complete is
to meet the needs of customers
A country with exports of $6 million and imports of $10 million has a
trade deficit
