quiz 3

Which of the following is most likely a nontariff barrier to international trade?

Establishing nonstandard packaging requirements for certain products

Which of the following is a function of the International Monetary Fund (IMF)?

Promoting global trade

In the context of the strategies for reaching global markets, which of the following statements is true of direct investment?

The cost involved in direct investment is high.

In the context of foreign direct investment, which of the following statements is true of joint ventures?

They are a controversial means of entering foreign markets.

The key disadvantage of foreign outsourcing is dramatically higher labor wages.

false

A _____ is formed when two or more companies share resources, risks, and profits without actually merging, to pursue specific opportunities.

joint venture

Which of the following countries most likely has a comparative advantage?

An Asian country that produces quality automobiles with little opportunity cost compared to other countries

Nessi Bru, an American construction firm, and West Brook Inc., a Canadian construction firm, collaborated on an infrastructure project to build a railway track from Regina in Canada to Minneapolis in the United States. They shared their resources, risks, and profits, but they still functioned as two independent firms. In this scenario, Nessi Bru and West Brook Inc. were most likely involved in _____.

a joint venture

In the context of economic considerations when entering a foreign market, which of the following is an example of the energy infrastructure in a country?

power plants

Merticao, a French textile company, supplied most of its products to its primary market in Hestonia, a North American nation. However, when Hestonia faced an economic downturn and its citizens began to reduce their expenditures, Merticao began to focus more on its domestic market. As a result, Merticao was able to survive the loss of its primary market because of _____ in global trade.

reduced risk

Bresnee, a European automobile company, plans to sell its automobiles in Lador, an Asian country. To do this, Bresnee has to make certain modifications in its marketing strategy such as using the regional language of Lador in its advertisements. Without such changes, Bresnee would not be able to establish a market in the country. In the given scenario, Bresnee is most likely facing the barrier of _____.

sociocultural differences

In Fidaro, a North American country, punctuality is considered a sign of integrity. On the other hand, in Gwary, an African country, punctuality is considered a sign of anxiety and is given less importance. This exemplifies:

sociocultural differences.

Inicell Inc., an American camera manufacturing company, wanted to import a few camera parts from Ruelia, an Asian company. However, the American government passed a taxation law that stated that a tax of 4% would be levied on all electronic imports. In this scenario, the American government imposed a(n) _____.

tariff

Boson Corp., an American software development company, wants to expand its business in international markets. Therefore, it buys property in Greitch, a South Asian country, and sets up a production facility despite the high costs involved. In this scenario, Boson Corp. is most likely involved in _____.

direct investment

Despite the growth rates in many high-population countries being weak, most of these nations remain ahead of the United States in terms of development and prosperity.

false

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

free trade

Which of the following companies is involved in foreign licensing?

A European company that grants a company in Asia the rights to produce and sell its products

Ithilium, a European country, is able to produce more electronics than Kilim, a North American country, even though both countries use the same amount of resources. Given this information, it can be deduced that Ithilium has a(n):

absolute advantage over Kilim.

Unless they face major trade barriers, the industries in any country tend to produce products for which they have a _____, which means that they tend to turn out those goods that have the lowest opportunity cost compared to other countries.

comparative advantage

Nipennie and Mirasa, two developing countries, bartered cotton for jute rather than for currency. In this scenario, the two countries engaged in _____.

countertrade

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

The term _____ refers to the shortfall that occurs when the total value of a nation's imports is higher than the total value of its exports.

trade deficit

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

true

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

true

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

true