ITB Chapter 3

T/F: 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

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

False

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

False

T/F: In the context of global trade, the exchange rate can directly measure global commerce.

False

T/F: Foreign licensing helps circumvent government restrictions on importing in closed markets.

True

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

True

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

True

T/F: The balance of trade plays a central role in determining the balance of payments.

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. a joint venture b. a limited liability partnership c. foreign franchising d. foreign outsourcing

a. a joint venture

When the industries in a country tend to produce products that have the lowest opportunity cost relative to other countries, the country most likely has a _____. a. comparative advantage b. balance of payments surplus c. positive balance d. trade surplus

a. comparative advantage

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 _____. a. foreign franchising b. direct investment c. a strategic alliance d. a joint venture

a. foreign franchising

In the context of the barriers to international trade, which of the following is the best way to jump over sociocultural barriers? a. Developing ethnocentric marketing practices b. Conducting thorough customer research c. Evaluating the economic conditions of a market d. Establishing production standards

b. Conducting thorough customer research

Which of the following strategies for reaching global markets is a specialized type of licensing? a. Partnership b. Foreign franchising c. Joint venture d. Exporting

b. Foreign franchising

_____ 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. a. Foreign franchising b. Foreign licensing c. Outsourcing d. Offshoring

b. Foreign licensing

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? a. It has a higher trade surplus than its neighboring countries. b. It enjoys an absolute advantage in terms of the particular cloth it produces. c. It enjoys the highest balance of trade among its neighboring countries. d. It has a lower balance of payments and a lower trade deficit for the particular cloth produced.

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

In the context of the economic differences among nations in international trade, effectively serving less-developed markets requires: a. the issuance of embargoes. b. the solicitation of money. c. innovation. d. ethnocentricity.

c. innovation.

Identify a true statement about exporting. a. It involves buying products domestically that have been produced in foreign nations. b. It represents an especially strong opportunity for small and mid-sized companies. c. It represents the deepest level of global involvement. d. It involves two or more companies joining forces—sharing resources, risks, and profits.

b. It represents an especially strong opportunity for small and mid-sized companies.

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. a. trade surplus b. balance of payments surplus c. trade deficit d. balance of payments deficit

c. trade deficit

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? a. Inflow of innovation b. Reduced risk c. Access to factors of production d. Growth of domestic industries

b. Reduced risk

In the context of international trade, India, China, and the Philippines attract multibillion-dollar investments because: a. they are more developed than any other developed country in the world. b. they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers. c. the value of euro is lower in the Asian market than in the American market. d. the level of risk associated with establishing business relationships with firms belonging to the Asian market is minimal.

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

Esterotia, a European 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. A quota b. An embargo c. A trading bloc d. A nontariff barrier

d. A nontariff barrier

Who among the following is most likely to benefit when the dollar is strong and the euro is weak? a. Hailinser who is an American exports goods to Europe. b. Fieolia Corp. is a European firm that imports goods from America. c. Joinieker Inc. is a European firm with American operations. d. Ron is an American who is touring Europe.

d. Ron is an American who is touring Europe.

_____ refers to selling products in foreign nations that have been produced or grown domestically. a. Foreign franchising b. Outsourcing c. Exporting d. Foreign licensing

c. Exporting

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

true