International Management Exam 1

Automobile companies promote different car models in different countries depending on a range of factors such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This most likely demonstrates that: only multinational giants can benefit from the globalization of markets. significant differences still exist among national markets. cultural diversity has been replaced by global uniformity. the global market is less complex than national markets. the social norms in a country do not affect purchase decisions of consumers.

significant differences still exist among national markets.

The advent of containerization has: increased costs of coordinating and controlling a global organization. slowed down the globalization of markets and production. made the economies of the world's nation-states less intertwined. significantly lowered the costs of shipping goods over long distances. made moving goods from one mode of transport to another extremely labor-intensive.

significantly lowered the costs of shipping goods over long distances.

Which of the following statements supports the claim that the gap between the rich and poor nations of the world has gotten wider because of globalization? Endemic corruption has long been a problem in the national governments of developing nations. Unelected bureaucrats limit a nation's ability to control its own destiny. There is a rapidly growing population in many developing nations. A quarter of the countries with a GDP per capita of less than $1,000 in 1960 had growth rates of less than zero from 1960 to 1995. There are many countries that suffer from totalitarian governments.

A quarter of the countries with a GDP per capita of less than $1,000 in 1960 had growth rates of less than zero from 1960 to 1995.

Which of the following is an argument against standardized advertising? It increases the costs of value creation. One large effort to develop a campaign fails to produce better results than 40 or 50 smaller efforts. Advertising regulations may block implementation of standardized advertising. It fails to make use of local talent available in other cultures. Royalties make it the most expensive form of advertising.

Advertising regulations may block implementation of standardized advertising.

Which of the following statements is true about economies of scale? The ability to spread variable costs over a large volume is a source of economies of scale. Attaining economies of scale increases a firm's profitability. Economies of scale lead to an increase in the average unit cost of a product. Economies of scale result due to the increase in the perceived value of a product. Economies of scale refer to cost savings that come from learning by doing.

Attaining economies of scale increases a firm's profitability.

Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001? Reducing barriers to cross-border investment Limiting the use of antidumping laws Phasing out subsidies to agricultural producers Cutting tariffs on industrial goods and services Attempts to tie trade to labor standards in a country

Attempts to tie trade to labor standards in a country

Which of the following has been declining in the developing nations of the world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil? Economic opportunities for international trade Industrialization Contribution toward the share of world output The stock of foreign direct investment Barriers to the free flow of goods, services, and capital

Barriers to the free flow of goods, services, and capital

Which of the following statements best indicates Samuelson's criticism of free trade? Trade changes a country's stock of resources and the efficiency with which it utilizes those resources. Dynamic gains lead to a universally beneficial outcome for all countries. Offshoring service jobs that were traditionally mobile will increase the market clearing wage rate. By importing cheap goods from a poor country a rich country may not be able to produce a net gain if the dynamic effect of free trade is to lower real wage rates in the rich country. Free trade has historically been beneficial only to developing countries.

By importing cheap goods from a poor country a rich country may not be able to produce a net gain if the dynamic effect of free trade is to lower real wage rates in the rich country.

Ryan is the executive general manager of a U.S. multinational and Veronica is a manager in a similar position, but works for another U.S. company that operates only in its home country. In this context, which of the following business functions will be most typically exclusive to Ryan? Marketing a product or service Adhering to labor and environmental standards Planning on a business strategy Maintaining healthy relations with the U.S. government Choosing an appropriate mode for entering a particular foreign country

Choosing an appropriate mode for entering a particular foreign country

Which of the following support functions is most likely to involve dealing with the organizational structure, control systems, and culture of the firm? Information systems Human resources Inventory management Company infrastructure Logistics

Company infrastructure

In which kind of retail system do a few retailers supply most of the market? Dispersed Concentrated Isolated Exclusive Fragmented

Concentrated

Which of the following statements reflects the nature of the global economy of the twenty-first century? The number of nations joining the ranks of the developed world has reduced. There are fewer instances of state-owned businesses privatized and markets being opened to more competition. National economies are becoming less integrated into a single and interdependent economic system. Countries have extensively adopted liberal economic policies. The world is currently moving toward an economic system that is more unfavorable for international business.

Countries have extensively adopted liberal economic policies.

Which of the following is a support activity in the operations of a firm? Customer service Research and development Marketing and sales Creation and maintenance of information systems Production

Creation and maintenance of information systems

Which of the following supports the argument that customer demands for local customization are on the decline worldwide? Customer tastes have converged worldwide. Local and indigenous industries are increasingly filling up available demand. Managers worldwide ignore the differences in consumer tastes and preferences. High costs of local customization are deterring companies from doing so. Governments across the world are standardizing their legal procedures.

Customer tastes have converged worldwide.

Which of the following factors constrains the globalization of markets? Differences in technical standards Uniform standard of living Market segments that transcend national borders Convergence of cultures Cosmopolitan tastes and preferences

Differences in technical standards

Which of the following groups benefits the most from the imposition of tariffs? Domestic producers Exporters and importers Consumers Foreign producers International bodies such as WTO

Domestic producers

Which of the following groups would benefit the most from receiving subsidies? Governments Foreign competitors International organizations such as the WTO Importers Domestic producers

Domestic producers

Which of the following is a macro factor underlying the trend toward greater globalization? Rise of communism across the globe Increase in trade regulations across the globe Increase in diversity in consumer tastes and preferences Dramatic developments in information processing and other technologies Increase in nationalization of private organizations

Dramatic developments in information processing and other technologies

What kind of demand is seen when a small change in price produces a large change in demand? Elastic Dynamic Relative Inelastic Rigid

Elastic

Which of the following refers to systematic reductions in production costs that have been observed to occur over the life of a product? Efficiency slope Economies of scale Location economies Learning effects Experience Curve

Experience Curve

Which of the following terms best represents the systematic reductions in production costs that have been observed to occur over the life of a product? Economies of scale Global web Dispersion linkage Efficiency frontier Experience curve

Experience curve

If a firm prices low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially, what kind of strategy is it pursuing? Multipoint pricing Economy pricing Predatory pricing Premium pricing Experience curve pricing

Experience curve pricing

Which of the following is one of the four factors included in Porter's diamond? Economies of scale Purchasing power parity Gross national income Gross domestic product Firm strategy, structure, and rivalry

Firm strategy, structure, and rivalry

Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors? Comparative advantages First-mover advantages Mercantilism Monopolistic practices Absolute advantages

First-mover advantages

Which kind of retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens distribution channels? Centralized Focused Exclusive Fragmented Concentrated

Fragmented

Which retail system has many retailers, no one of which has a major share of the market? Concentrated Focused Fragmented Consolidated Exclusive

Fragmented

Which of the following is the most appropriate solution to the problem of rising carbon dioxide emissions in developed economies? Get the nations of the world to agree to policies designed to limit pollutant emissions. Restrict international trade and investment only to services. Roll back the trade liberalization efforts that have fostered economic growth and globalization. Increase the export of low-wage manufacturing jobs to developing nations. Tie free trade agreements to the implementation of fewer environmental and labor laws in less developed countries.

Get the nations of the world to agree to policies designed to limit pollutant emissions.

Which of the following is true according to Theodore Levitt's article in the Harvard Business Review about the globalization of world markets? Global corporations adjust their products and practices to suit each country. Global corporations operate from a single country. Global corporations are in danger of losing out to small businesses. Global corporations operate at low relative costs. Global corporations consider the world to consist of distinct and unique entities.

Global corporations operate at low relative costs.

Which of the following is a statement made by Theodore Levitt about the globalization of world markets? Capitalism is the force that drives the world toward a converging commonality. Multinational corporations are in danger of losing out to small businesses. Global markets for standardized consumer products have emerged on a large scale of magnitude. Global corporations consider the world to consist of distinct and unique entities. Accustomed differences in national or regional preferences are becoming more significant.

Global markets for standardized consumer products have emerged on a large scale of magnitude.

What is the shift toward a more integrated and interdependent world economy called? Containerization Globalization International trade Moore's Law Foreign direct investment

Globalization

Which of the following refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors such as labor, energy, land, and capital? Globalization of production Containerization of production Globalization of markets Industrialization of markets Dispersal of production

Globalization of production

Which of the following is a drawback of longer distribution channels? Greater aggregate markups due to a lack of intermediaries Higher prices charged to consumers Lower selling costs in a concentrated retail sector The inability to enter exclusive distribution channels Higher selling costs in a fragmented retail sector

Higher prices charged to consumers

What kind of demand is seen when a large change in price produces only a small change in demand? Consistent Dynamic Elastic Inelastic Flexible

Inelastic

Which of the following is a power of the WTO? It can grant loans to cash-strapped governments in poor nations. It can make decisions related to international trade without considering the collective interests of member-states. It supersedes IMF and has complete authority over IMF's actions. It can restrict the membership of nations in other supranational organizations such as the United Nations. It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations.

It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations.

Which of the following is most likely to be the advantage of locating a value creation activity in the optimal location for that activity? It decreases consumer surplus. It nullifies all trade barriers. It enables a firm to differentiate its product offering from those of competitors. It increases the costs of value creation. It helps the firm to achieve a high-cost position.

It enables a firm to differentiate its product offering from those of competitors.

Which of the following is an argument against embracing strategic trade policy? It leads to a compromise in national sovereignty. It increases the prices of the products for the domestic consumers. It hampers the abilities of the domestic firms to achieve a dominant position in the global industry. It hampers the chances of a country's firms to effectively exploit the first-mover advantages. It is certain to be captured by special-interest groups within the economy, which will distort it to their own ends.

It is certain to be captured by special-interest groups within the economy, which will distort it to their own ends.

Which of the following is a major reason why many economists remain critical of the infant industry argument? It promotes foreign direct investment. It affects the standards of living and per capita income of the people. It does not provide guaranteed employment for the citizens. It leads to reduced prices in domestic markets. It makes the domestic industry inefficient.

It makes the domestic industry inefficient.

Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997? It reduced the export of pirated imitations of patented innovations pioneered in a different country. It liberalized trade policies by eliminating tariffs, subsidies, import quotas, antidumping duties, and local content requirements. It offered a greater ability for companies to offer a global, seamless service for all their corporate needs. It helped resolve deadlock situations arising out of the unwillingness to lower trade barriers between neighboring countries. It enhanced protection of patents, copyrights, and trademarks (intellectual property).

It offered a greater ability for companies to offer a global, seamless service for all their corporate needs.

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses? It would concentrate its productive activities in its home country. It would concentrate its productive activities mostly in developing countries. It would disperse its productive activities across all countries that serve as its market. It would concentrate its productive activities mostly in developed countries. It would disperse its productive activities to those countries where they can be performed most efficiently.

It would disperse its productive activities to those countries where they can be performed most efficiently.

Which of the following is a drawback of the product life-cycle theory? Its relevance in the modern world seems limited. It makes many simplifying assumptions. It fails to explain what happens when a product's market in the United States and other advanced nations matures. It fails to account for diminishing returns. It fails to explain the pattern of international trade during the period of American global dominance.

Its relevance in the modern world seems limited.

Which of the following is a result of certain products having small national markets, in the absence of trade? Each nation will specialize in producing a narrower range of products than it would in the presence of trade. At low volumes of production, unit costs and prices would be lowered. Limited demand for such products leads to non-realization of economies of scale. The variety of products available to consumers increases. The first movers in an industry may get a lock on the world market that discourages subsequent entry.

Limited demand for such products leads to non-realization of economies of scale.

Which of the following conditions is most favorable to reap gains from global scale economies? High pressure to delegate production to domestic subsidiaries Low demand for local responsiveness National differences in accepted business practices Lack of universal needs High pressures for cost reduction

Low demand for local responsiveness

Salcia is a country that depends heavily on domestic products. The Salcian government decides on the products that can be imported and ensures that any product that can be produced at home is not imported. A major part of Salcia's trade is concentrated on exporting agricultural produce and textiles. Which of the following influences Salcia's approach to international trade? Leontief's paradox Product life-cycle theory Mercantilism New trade theory Neo-Ricardian trade theory

Mercantilism

Which of the following is true of Theodore Levitt's arguments concerning the globalization of world markets? As observed by Levitt, multinational corporations do not tailor their products to suit different countries. Academics feel that Levitt understates his case concerning global markets and the fall of multinational corporations. Levitt's arguments hold true with respect to consumer goods markets but not for basic industrial products. Modern transportation is facilitating a convergence of tastes and preferences among consumers in advanced countries of the world. Globalization, in the sense used by Levitt, is the rule in consumer goods markets and industrial markets.

Modern transportation is facilitating a convergence of tastes and preferences among consumers in advanced countries of the world.

Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two countries. As a result, it would be most appropriate to refer to Silver Fire Electric as what type of enterprise? Greenfield Multinational Private Public Universal

Multinational

Which of the following refers to the fact that a firm's pricing strategy in one market may have an impact on its rivals' pricing strategy in another market? Leader pricing Multipoint pricing Price skimming Dumping Predatory pricing

Multipoint pricing

Which of the following factor endowments would be classified as a basic factor by Michael Porter? Research facilities Natural resources Communication infrastructure Technological know-how Skilled labor

Natural resources

Which of the following theories supports government intervention and strategic trade policy? Product life-cycle theory New trade theory Theory of comparative advantage Theory of absolute advantage Heckscher-Ohlin theory

New trade theory

According to Krugman, which of the following best indicates the dangers of a strategic trade policy? Huge financial debts for the countries involved Occurrence of a trade war Decrease in subsidies Occurrence of a global recession Decrease in protectionism

Occurrence of a trade warinfant industry argument.

Which of the following is considered to be the ultimate objective of antidumping policies? Preventing domestic firms from unloading their excess production in domestic markets Protecting consumers from high prices Preventing foreign products from entering domestic market Protecting consumers from substandard and hazardous products Protecting domestic producers from unfair foreign competition

Protecting domestic producers from unfair foreign competition

Which kind of strategy do firms in consumer goods industries that are trying to sell to a large segment of the market generally favor? Lag Pull International Exclusive distribution Push

Pull

Which of the following marketing strategies relies on access to advertising media? Direct selling Copy testing Pull strategy Push strategy Personal selling

Pull strategy

Which of the following refers to the total cumulative value of foreign investments? Purchasing power parity Multipoint pricing Switch trading Stock of foreign direct investment Bill of lading

Stock of foreign direct investment

Which of the following allows two or more firms to share the fixed costs (and associated risks) of developing new products or processes? Strategic alliance Global web Dispersion linkage Free trade agreement Franchising agreement

Strategic alliance

Which of the following refers to a cooperative agreement between potential or actual competitors? Economic association Tactical union Nationalization Strategic alliance Political affiliation

Strategic alliance

Which of the following is a trade policy instrument that the GATT and WTO have been most successful in limiting? Subsidies Tariffs Local content requirements Voluntary export restraints Import quotas

Tariffs

U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called? A zero-sum game A positive-sum game Samuelson's critique The Leontief paradox A first-mover advantage

The Leontief paradox

Which of the following best explains the reason for the rise in protectionist pressures around the world during the 1980s? The opening up of international markets to cheap products from China The economic failure of Japan which hampered the global economy The fall of the Soviet Union The strict GATT bureaucracy in Geneva controlling trade regulations The persistent trade deficit in the world's largest economy, the United States

The persistent trade deficit in the world's largest economy, the United States

On which of the following observations was Raymond Vernon's product life-cycle theory based? The United States exports goods that heavily use skilled labor and imports heavy manufacturing products that use large amounts of capital. The United States developed a very large proportion of the world's new products for most of the twentieth century and sold them first in the U.S. market. The wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products. The high cost of U.S. labor gave U.S. firms an incentive to develop cost-saving process innovations. The United States has long been a substantial exporter of agricultural goods, reflecting in part its unusual abundance of arable land.

The United States developed a very large proportion of the world's new products for most of the twentieth century and sold them first in the U.S. market.

Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages? The ability to specialize in the production of a particular product Absolute advantage and higher efficiency A positive-sum game due to lack of competition The ability to capture scale economies ahead of later entrants Increasing returns to specialization

The ability to capture scale economies ahead of later entrants

Which of the following is NOT a constraint on a firm's ability to disperse its productive activities to foreign countries? Local content requirements demanding a specific fraction of domestic production Tariff barriers raising the costs of exporting products to a country Antidumping policies limiting the ability of a firm to use aggressive pricing Quotas restricting the quantity of a good that can be imported into a country The increasing integration of the world economy

The increasing integration of the world economy

Which of the following statements is true regarding GATT? Tariff reductions through negotiations were completed in three rounds. GATT attempted to liberalize trade restrictions in one go. GATT regulations were mostly enforced by the EU nations rather than by a mutual monitoring mechanism. The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993. In its early years, GATT was unsuccessful and hence was superseded by the World Bank.

The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993.

Which of the following has seen a positive change from 1960 to 2012? Prevalence of independent and self-contained national economies The share of world output accounted for by developing nations U.S. position in the world economy and world trade picture Growth of the centrally planned economies of the communist world The share of world output enjoyed by rich industrialized countries such as Great Britain, Germany, and Japan

The share of world output accounted for by developing nations

Who among the following asserted in an article in the Harvard Business Review that modern transportation and communications technologies are facilitating a convergence of certain tastes and preferences among consumers in the more advanced countries of the world? Peter Drucker Christopher Bartlett Theodore Levitt C.K. Prahalad Gary Hamal

Theodore Levitt

Which of the following is true about learning effects? They are important only during the start-up period of a new process. They typically last a lifetime. They tend to be more significant in nonrepetitive tasks. They do not have any effect on the cost of production. They tend to be less significant when a task is technologically complex.

They are important only during the start-up period of a new process.

Which of the following is an empirically supported prediction of the new trade theory? Nations benefit from trade only when they differ in factor endowments. Comparative advantage arises from differences in productivity and factor endowments. The locus of global production initially switches from the United States to other advanced nations. Trade increases the specialization of production within an industry. Government intervention and strategic trade policies are more likely to harm international trade than is free trade.

Trade increases the specialization of production within an industry.

The WTO's Agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules? Court of Arbitration of Intellectual Property (CAIP) Trade-Related Aspects of Intellectual Property Rights (TRIPS) International Body on Intellectual Property (IBIP) Intellectual Property Rights Enforcement and Resolution (IPER) Intellectual Property Rights Enforcement Directive (IPRED)

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

The economically damaging effects of the Great Depression were worsened in 1929 by the: harvest failure in Great Britain and famine in Ireland. First World War. Cold War between the world's superpowers. U.S. stock market collapse. spread of communism through Europe.

U.S. stock market collapse.

Which of the following has increased in the United States as a result of globalization? Standard of living Unemployment rate Demand for unskilled workers Income equality between workers in skilled and unskilled sectors Price of goods and services

Unemployment rate

Which of the following countries has seen a relative decline in its share of world output between 1960 and 2012? Japan China United States Thailand South Korea

United States

In which of the following conditions does arbitrage occur? When a firm imports products from a manufacturer and distributes them directly through retail outlets When a firm sells a product at higher prices to make a profit from relatively fewer sales When a firm purchases products in a country where prices are lower and resells them in a country where prices are higher When a firm offers a product at low prices through discount coupons and promotions When a firm prices its products at the least cost, risking losses, in order to grab market share

When a firm purchases products in a country where prices are lower and resells them in a country where prices are higher

According to research, when do consumers usually use the country of origin as a cue when evaluating a product? When a firm tries to deemphasize its foreign origins When a firm resorts to personal selling instead of mass media advertising When an advertising campaign stresses the positive performance attributes of a product When consumers lack detailed knowledge of a product When a limited number of messages compete with each other for consumers' attention

When consumers lack detailed knowledge of a product

Neo-mercantilists equate political power with economic power and economic power with: capitalism. a trade monopoly. corruption. a balance-of-trade surplus. regional dominance.

a balance-of-trade surplus.

A zero-sum game is a situation in which: one country has an absolute advantage in the production of all goods. a country engages in international trade even for products it is able to produce for itself. an economic gain by one country results in an economic loss by another. the market mechanism determines what a country imports and what it exports. limits on imports are often in the interests of domestic producers, but not domestic consumers.

an economic gain by one country results in an economic loss by another.

The appropriateness of the strategy that a firm chooses to use in an international market varies with the extent of pressures for: customer surplus and quality improvements. product standardization and cost reductions. quality improvement and product standardization. cost reductions and local responsiveness. customer surplus and product standardization.

cost reductions and local responsiveness.

Cost reduction pressures tend to be particularly intense in industries that: serve different customers with different needs. are not involved in international business. create customized products. produce products that have inelastic demand. create products that serve universal needs.

create products that serve universal needs.

The efficiency frontier has a convex shape because of: a high-cost structure. high profit growth. diminishing returns. a significantly low product value. low production costs.

diminishing returns.

If Argonia exports vast quantities of cheap toys to Cadmia, selling them at below their costs of production, it would constitute: offshoring. dumping. nearshoring. subsidizing. monopolism.

dumping.

Spreading fixed costs over a large volume results in a cost-savings phenomenon referred to as: volume synergies. economies of scale. captured savings. location economies. size effects.

economies of scale.

According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in: labor productivity. trade barriers. diminishing returns. management practices. factor endowments.

factor endowments.

One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that: foreign competition will eventually cause domestic firms to improve the quality of their products. protection of manufacturing from foreign competition is harmful. foreign firms too come under the definition of infant industry when they newly enter a foreign market. firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets. absolute advantage cannot sustain productivity of an industry.

firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets.

The economic and strategic advantages that accrue to early entrants in an industry are called: factor endowments. first-mover advantages. absolute advantages. economies of scale. comparative advantages.

first-mover advantages.

The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were: global telecommunication and financial services industries. pharmaceuticals and heavy metal industry. scientific research and defense sector. pharmaceuticals and biotechnology. scientific research and global telecommunication.

global telecommunication and financial services industries.

Considered to be the first theory of international trade, the principal assertion of mercantilism is that: countries should specialize in the production of goods for which they have an absolute advantage. countries differ in their ability to produce goods efficiently. gold and silver are the mainstays of a country's wealth and essential to vigorous commerce. differences in labor productivity between nations underlie the notion of comparative advantage. resources can move freely from the production of one good to another within a nation.

gold and silver are the mainstays of a country's wealth and essential to vigorous commerce.

New trade theory argues that, through its impact on economies of scale, trade can: enable the global market to support a wide range of enterprises. increase the variety of goods available to consumers. prevent diminishing of returns and promote constant returns to specialization. negatively affect the first-mover advantage for all products. increase the average costs of goods.

increase the variety of goods available to consumers.

The liberalization of the world trade and investment environment in recent decades, by facilitating greater international competition, has generally: increased cost pressures. reduced the production of conventional commodity products. increased consumer surplus. decreased pressures for cost reduction. decreased the demand for local responsiveness.

increased cost pressures.

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to: comparative advantage theory. economic development argument. national security argument. mixed economy theory. infant industry argument.

infant industry argument.

One of the reasons why a firm typically charges for a good or service less than the value placed on that good or service by the customer is because: it is normally impossible to segment a market based on each customer's reservation price. the value creation results in a corresponding reduction in costs of production. the firm attempts to create value for the consumers by providing them a wide range of products. the firm frequently modifies its products to compete with the products introduced by other firms. it is highly unlikely that the same good or service will be available to the customers from other firms.

it is normally impossible to segment a market based on each customer's reservation price.

Free trade alone, some argue, is a necessary but not sufficient prerequisite to help the world's poorest countries bootstrap themselves out of poverty. They also recommend: a highly regulated command economy. rapid expansion in population. large-scale debt relief. weaker labor regulations. weaker property rights laws.

large-scale debt relief.

The two phenomena that help explain the experience curve are: standardized manufacturing and global web. efficiency frontier and location economies. technology inputs and wealth transfer. learning effects and economies of scale. leveraging subsidiary and local responsiveness.

learning effects and economies of scale.

Labor productivity increases over time as individuals understand the most efficient ways to perform particular tasks. This is a result of: location economies. an efficiency frontier. diminishing returns. economies of time. learning effects.

learning effects.

Early outsourcing efforts were primarily confined to: consulting services. accounting services. testing services. manufacturing activities. educational activities.

manufacturing activities.

Universal Lingo, a U.K.-based language translation company employing just 65 people worldwide, has an annual turnover of $1.5 million. In this context, Universal Lingo is most likely to be classified as a(n): mini-multinational firm. foreign firm. multinational giant. greenfield firm. large domestic firm.

mini-multinational firm.

Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because: the member nations had ceased to recognize GATT as a regulatory body for international trade. VERs were not a recognized trade barrier under the GATT constitution. neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action. these nations withdrew their membership to the GATT. member nations erected a wall of tariff barriers.

neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action.

In terms of communication strategy, in highly developed countries such as the United States: source effects are always positive. noise is extremely high. country of origin effects are not applicable. pull strategies are more important than push strategies. cultural barriers do not exist.

noise is extremely high.

A measure of the responsiveness of demand for a product to changes in price is known as: the demand to price ratio. price-demand rigidity. demand function of pricing. price elasticity of demand. demand and price dynamics.

price elasticity of demand.

The 1993 Uruguay Round: transformed the World Trade Organization into the GATT. increased trade and investment barriers. excluded the trade of services from international trade. promoted the worldwide rise of communism. provided enhanced protection for patents, trademarks, and copyrights.

provided enhanced protection for patents, trademarks, and copyrights.

According to Paul Krugman, a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to: provoke retaliation. move away from protectionism. dominate the industry. upset the special-interest groups within the economy. incur huge financial debts.

provoke retaliation.

The amount of value a firm creates is measured by: dividing the net profits of the firm by total invested capital. the difference between the previous year's profitability and the current year's profitability. dividing the market price of its products by the price that customers are actually willing to pay. the sum of the profitability of the last two fiscal years. the difference between its costs of production and the value that consumers perceive in its products.

the difference between its costs of production and the value that consumers perceive in its products.

The new trade theory diverts from its advocacy of free trade by suggesting that: the price of a new product increases along with the increase in the popularity of the product. there is an economic rationale for a proactive trade policy. the role of luck, entrepreneurship, and innovation is important in giving a firm first-mover advantages. nations benefit from trade even in the absence of resource endowments and technology. market expansion leads to better realization of economies of scale.

there is an economic rationale for a proactive trade policy.