BUS 100 Chapter 3

Quotas are taxes levied against imports.

False

__________is the authority granted by a domestic firm to an overseas firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area

Foreign licensing

__________range from simple barter to a complex web of exchanges that end up meeting the needs of multiple parties

Individual countertrade agreements

Sloimekia can manufacture more of a certain kind of cloth than its neighboring countries, although they all have the same amount of resources for the cloth's production. In this scenario, which of the following statements is true of Sloimekia?

It enjoys an absolute advantage in terms of the particular cloth it produces

Who among the following is most likely to benefit in a case where there is a weak dollar against a euro?

John is an American who exports goods to Europe.

Regency Placade, a renowned European electronics company, wants to set up a subsidiary in Finim, an Asian country. After conducting a survey, the company finds that Finim lacks the resources required for production. Therefore, Regency Placade decides to abandon the idea. In this scenario, which of the following most likely affected Regency Placade's plan?

Limited access to factors of production

Which of the following is the most costly form of foreign direct investment?

Offshoring

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

World Bank

__________refers to the unrestricted movement of goods and services across international borders

a. Direct investment b. Free trade c. Protectionism d. Countertrade

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

A__________refers to the overage that occurs when more money flows into a nation than out of that nation.

balance of payments surplus

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

countertrade

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

CuberTech, an American electronics company, set up its production facilities in Chuaga, an Asian country, because the workers in Chuaga work for about one-third the pay of American workers. This substantially lowered CuberTech's cost of production. This scenario is an example of _____.

direct investment

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

In the context of international trade, which of the following statements is true of comparative advantage

As technology changes, nations may gain or lose comparative advantage in various industries.

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

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

False

Who among the following is most likely to benefit when the dollar is strong and the euro is weak?

Ron is an American who is touring Europe

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

True

Brentia, an East Asian country, exported goods worth $50 million and imported goods worth $5 million in the last fiscal year. It also provided a loan of $25 million to another country. In this scenario, Brentia most likely had a _____ in the last fiscal year.

balance of payments surplus

In__________, firms either acquire foreign firms or develop new facilities from the ground up in foreign countries

direct investment

Brixbee Inc., a European electronics company, has given a domestic firm in Lougard, an Asian country, the rights to manufacture and market its product within Lougard. In this scenario, Brixbee Inc. is most likely involved in _____

foreign licensing

Compared to the United States, China and India have:

higher gross domestic product growth rates.

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 _____.

joint venture

Which of the following countries has a trade deficit?

A European country that has a higher total value of imports than exports

The government of Lebitz, a European country, learns that low-priced textile imports from Pruneia, an Asian country, are affecting the sales of domestic textile companies. The Lebitzian government decides to levy a 6% tax on all textile goods imported from other countries. In this scenario, which of the following trade restrictions does the Lebitzian government impose?

A tariff

Which of the following countries is involved in countertrade?

An Asian country that provides sugarcane to an African country in exchange for jute

Chechinko, an African country, and Herito, an Asian country, use the same amount of resources to produce alcohol. Despite this, Chechinko is able to manufacture a higher quantity of alcohol than Herito. In this context, which of the following statements is definitely true of Chechinko?

Chechinko enjoys an absolute advantage in terms of alcohol production, relative to Herito.

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 is a disadvantage of foreign outsourcing?

a. The foreign company needs to pay high wages to the workers. b. The adherence to ethical standards by foreign producers is at risk. c. The cost of production becomes irrecoverable. d. The returns on investment are diminished.

Clark and Nestor start a catering 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. barter b. a strategic alliance c. a partnership d. countertrade

In the context of international trade restrictions, _____ are limitations on the amount of specific products that may be imported from certain countries during a given time period

quotas

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.

The balance of trade is also referred to as countertrade.

False

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

False

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

foreign outsourcing

The basic mission of the _____ is to promote global economic cooperation and stable growth

international Monetary Fund

Incorrectc. build exporting opportunities through better relationships with other countries

protect national security interests

Umeron, a European country, wants to import 18 million bales of cotton from Trumberton, an Asian country. However, Umeron is able to import only 10 million bales because Umeron's import laws limit the amount of cotton and jute that can be imported. In the given scenario, the government of Umeron has imposed a(n) _____ to restrict international trade.

quota

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

Wichasha, an African country, exports barley and cotton worth $100 million to Illema, a European country, and it imports sugarcane worth $25 million from Illema. As such, the total value of Wichasha's exports is higher than the total value of its imports. This difference between the value of Wichasha's exports and imports is known as _____.

the balance of trade

When the total value of a nation's exports is higher than the total value of its imports, that country has a(n) _____.

trade surplus

Grettzee, a musical instruments manufacturing company, imports high-quality maple wood from Resumbro, a South Asian country where maple is found in abundance. Which of the following is most likely to have influenced Grettzee's decision to import raw materials from Resumbro?

Access to factors of production

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

An Asian company that can only import a limited amount of crude oil from an Arab country because of international trade restrictions

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

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

Which of the following countries has a trade surplus?

An Asian country whose total value of exports exceeds its total value of imports

Quezi, an East Asian country, borrows $300 million from Muranico, a North American country, to fund its infrastructure projects. Quezi exports petroleum worth $700 million to Muranico and other countries. Besides this, Quezi provides foreign aid worth $40 million. In this scenario, this flow of money into and out of Quezi can be measured by _____.

Balance of payments

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 had engaged in _____.

Countertrade

Luchen Modo, a software development firm in Asia, launched a new software for smartphones that allowed users to remotely control certain functions and features of their vehicles, such as ignition, windshields, and headlights. The success of this technology prompted other companies across the world to produce similar software. In this scenario, which of the following is most likely to have influenced other companies to produce similar software?

Inflow of innovation

Negacho, a food and beverage company, introduced a new flavor of potato chips called South Indian Chillis. It received a positive response from consumers, which prompted Brex Mex, another food company, to introduce its own Szechuan flavored chips. In this scenario, which of the following is most likely to have influenced Brex Mex to produce a product similar to Negacho's?

Inflow of innovation

Prost was the first automobile company in the world to introduce child safety locks in its vehicles. This feature soon became a major selling point for consumers all over the world. As a result, other automobile companies began providing a similar feature in their vehicles. In this scenario, which of the following is most likely to have influenced other companies to install child safety locks?

Inflow of innovation

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

Involvement of social responsibility

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

It includes foreign borrowing and lending.

In the context of foreign direct investment, which of the following statements is true of a partnership?

It is a formal, long-term agreement.

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

It is the most basic level of international market development.

Which of the following statements is true of international trade

It offers companies an invaluable source of new ideas.

Alice, the global marketing director of a multinational electronic goods manufacturing firm, is assigned the task of expanding her firm in new markets. She learns that hiring labor is expensive and that the required technical manufacturing equipment is unavailable in the international market. In this scenario, which of the following is most likely affecting the global trade of Alice's firm?

Limited access to factors of production

Nescat Autos, an automobile manufacturing company, developed a secondary market for its products in a foreign country. This allowed the company to minimize its losses when its primary market failed to generate enough revenue to benefit the company. In this scenario, which of the following is most likely to have influenced Nescat Autos's decision to set up a market in another country?

Reduced risk

Vertiaplume, a drug manufacturing company, exports its products to more than 15 countries around the world. Regardless of reduced sales in one of these countries, Vertiaplume is able to maintain its overall profits. In the given scenario, which of the following is a reason behind Vertiaplume's ability to maintain its overall profits?

Reduced risk

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

True

In foreign licensing, licensors run the risk that unethical licensees may become their competitors, using information that they gained from the licensing agreement.

True

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

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.

In the fiscal year 2015-2016, Nescarto, an African country, imported goods worth $18 million and exported goods worth $20 million. It also borrowed $40 million from other countries. In this scenario, Nescarto had a _____ during 2015-2016.

balance of payments surplus

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

Neminski, an Arab country, is renowned for its rich oil reserves. It earns approximately $1.3 billion annually by selling crude oil to other countries. Given this information, Neminski is most likely involved in _____

exporting

Pyoiunalek's, a restaurant chain, markets and endorses its businesses in other countries by offering buyers the rights to launch and operate the restaurant in that country. It lends financial and marketing assistance to the buyers. In this scenario, Pyoiunalek's is employing the strategy of _____ to reach global markets

foreign franchising

Tanya Williams, the chief executive officer of Willister Computers, believes that the firm is currently best equipped to enter the market of Troyesna, a fast-developing country. The firm offers a small-scale producer in Tryoesna the right to produce and market its goods based on a set of specific operating functions and requirements. This scenario of Willister Computers illustrates

foreign franchising

Quistor Inc., a company based in the country of Waltefa, contracts with a small-scale supplier in the country of Carlesna to manufacture its computers and tablets across the world. This strategy by Quistor Inc. illustrates _____.

foreign outsourcing

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

legal differences

Remurio Inc., an African multinational company, wants to import raw materials from Infigerd, an Asian country. However, the company can import only a certain quantity of raw materials because of trade restrictions imposed by Infigerd. In this scenario, Remurio Inc. is most likely facing the barrier of _____.

legal differences

Vieorien, a company based in the country of Dannistel, has permitted a foreign company the rights to produce its products and to use the Vieorien trademark. However, Vieorien does not have the authority or the rights to dictate the business operations of the foreign company. In this scenario, the foreign company that Vieorien deals with is the _____

licensee

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

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

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

sociocultural differences

Romernia, an Asian country, imported goods and services worth $700 million in the last fiscal year. It exported goods worth $400 million in the same year. The difference in the value of Romernia's imports and exports is known as _____.

the balance of trade

Nersina, a European country, exports petroleum and imports cotton and jute. In the current fiscal year, the total value of Nersina's exports is higher than the total value of its imports. In this scenario, Nersina most likely has a _____

trade surplus

Resorto, a European country, exported sugar worth $600 million between 2015 and 2016 and imported tea worth $750 million during the same period. In this scenario, Resorto most likely had a _____ between 2015 and 2016

trade deficit

The total value of the goods exported by Maulini, a South American country, in the last fiscal year was lower in comparison to the total value of the goods imported by it. Given this information, Maulini had a _____ in the last fiscal year.

trade deficit

Consider an exchange rate situation in which 1 Indian rupee equals 0.40 Japanese yen. Given this information, which of the following statements is true?

A Japanese tourist can buy more goods and services in India.

Which of the following companies is engaged in importing?

A company that buys electronic goods that are domestically manufactured by other countries

Elision Inc., an American software development company, outsourced its support operations to Luzenza, an Asian nation, because it found that Luzenza has a large cohort of English-speaking college graduates who are ready to work for one-fourth the pay of comparable American workers. Which of the following is most likely to have influenced Elision Inc.'s decision to outsource its support operations to Luzenza?

Access to factors of production

__________refers to selling products in foreign nations that have been produced or grown domestically

Exporting

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

False