Question 1

Explain and provide examples of the difference between comparative and absolute advantage in global markets.

Accepted Answer

Comparative advantage theory states that...

Question 2

If a protective tariff is placed on an imported product,the added cost will go to the government.

Accepted Answer

A) True 
 B)False

Question 3

Country A is extremely efficient in the mining of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:

Accepted Answer

A)   produce both tin and corn in order to remain self-sufficient.
B)   watch the global market to see which product is bringing the highest price.
C)   import the resources needed to produce corn.
D)   concentrate its production on tin and buy corn from an efficient producer.E) B) and D)
F) A) and B)

Question 4

When U.S.firms choose to hire skilled and unskilled workers in other countries to produce goods and services,rather than producing them in the United States,we refer to this as _________.

Accepted Answer

A)   offshore procurement
B)   domestic outsourcing
C)   foreign distribution
D)   offshore outsourcingE) A) and B)
F) B) and D)

Question 5

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

Accepted Answer

A) True 
 B)False

Question 6

After finishing college,Nathan joined his uncle's company in Miami,FL,a company that buys bauxite,copper,and other minerals from the country of Chile,and brings them into the U.S.Everyday,he brokers trades with mines in Chile.His uncle's company is in the export business.

Accepted Answer

A) True 
 B)False

Question 7

A favorable balance of trade occurs when the value of a nation's exports exceeds its imports.

Accepted Answer

A) True 
 B)False

Question 8

With the achievements of the General Agreement on Tariffs and Trade (GATT)and the World Trade Organization (WTO),nearly all barriers to trade expansion are finally removed.

Accepted Answer

A) True 
 B)False

Question 9

The _____________ is the total value of a nation's exports compared to its imports measured over a specific period of time.

Accepted Answer

A)   balance of payments
B)   balance of trade surplus
C)   balance of trade deficit
D)   balance of tradeE) C) and D)
F) B) and D)

Question 10

Products made in Canada are sold in the U.S.because these two nations agree to eliminate economic and political barriers between nations.They participate in free trade.

Accepted Answer

A) True 
 B)False

Question 11

Although it has experienced persistent social unrest,multinationals have shown interest in Russia due to:

Accepted Answer

A)   its cultural compatibility to the West.
B)   the consistent strength of its currency compared to U.S.and Japanese currencies.
C)   the size of its natural resources.
D)   its current abolishment of religious freedom.E) A) and D)
F) A) and C)

Question 12

Contract manufacturing is when a firm pays foreign manufacturers to produce its product.The Foreign manufacturer places the domestic company's label on the products.

Accepted Answer

A) True 
 B)False

Question 13

A sociological challenge that must be overcome in order to be successful in the global market is:

Accepted Answer

A)   A lack of cultural understanding.
B)   An overly anxious desire to please at all cost.
C)   Inequality of global natural resources.
D)   Wealth management.E) All of the above
F) A) and B)

Question 14

Which of the following statements best describes the theory of comparative advantage?

Accepted Answer

A)   The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on other nations to obtain goods and services.
B)   Each nation should produce those goods that it can produce more efficiently and effectively than other nations,and buy the goods it cannot produce efficiently from other nations.
C)   The nation that has the largest reserves of gold and other natural resources will enjoy a position of comparative advantage in trade relationships.
D)   A nation should produce those goods for which domestic demand is comparatively strong,and should import those goods for which domestic demand is comparatively weak.E) A) and B)
F) B) and D)

Question 15

Nikkei Auto Parts testified before Congress defending the company against an accusation that it was dumping auto parts on the U.S.market.In her testimony,the president claimed ________________.Using traditional guidelines,Congress determined that Nikkei was not dumping.

Accepted Answer

A)   Nikkei includes 10% overhead costs and an 8 percent profit margin in the price of all the parts they export to the U.S.
B)   Japan runs a trade deficit with the U.S.in auto parts.
C)   Nikkei is a staunch supporter of free trade.
D)   Nikkei sells more auto parts in Europe than it does in the U.S.E) None of the above
F) A) and B)

Question 16

Restrictive standards that detail exactly how a product must be sold in a country are examples of protective tariffs.

Accepted Answer

A) True 
 B)False

Question 17

__________ is the exchange of merchandise or services for other merchandise or services without the exchange of money.

Accepted Answer

A)   Exporting
B)   Bartering
C)   Importing
D)   FactoringE) B) and C)
F) All of the above

Question 18

Small businesses are less involved in global trade today than in the past.

Accepted Answer

A) True 
 B)False

Question 19

The value of Chinese exports coming to the United States is greater than the value of goods China buys from the United States.This results in a U.S.trade deficit with China.

Accepted Answer

A) True 
 B)False

Question 20

Devaluation refers to a decline in the value of a nation's currency relative to other currencies.

Accepted Answer

A) True 
 B)False

Exam 3: Doing Business in Global Markets

Country A is extremely efficient in the mining of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:

Correct AnswerverifiedShow Answer

Small businesses are less involved in global trade today than in the past.

Correct AnswerverifiedShow Answer

The _____________ is the total value of a nation's exports compared to its imports measured over a specific period of time.

Correct AnswerverifiedShow Answer

A sociological challenge that must be overcome in order to be successful in the global market is:

Correct AnswerverifiedShow Answer

If a protective tariff is placed on an imported product,the added cost will go to the government.

Correct AnswerverifiedShow Answer

Contract manufacturing is when a firm pays foreign manufacturers to produce its product.The Foreign manufacturer places the domestic company's label on the products.

Correct AnswerverifiedShow Answer

Products made in Canada are sold in the U.S.because these two nations agree to eliminate economic and political barriers between nations.They participate in free trade.

Correct AnswerverifiedShow Answer

Restrictive standards that detail exactly how a product must be sold in a country are examples of protective tariffs.

Correct AnswerverifiedShow Answer

__________ is the exchange of merchandise or services for other merchandise or services without the exchange of money.

Correct AnswerverifiedShow Answer

With the achievements of the General Agreement on Tariffs and Trade (GATT)and the World Trade Organization (WTO),nearly all barriers to trade expansion are finally removed.

Correct AnswerverifiedShow Answer

Explain and provide examples of the difference between comparative and absolute advantage in global markets.

Correct AnswerverifiedComparative advantage theory states that...View AnswerShow Answer

Which of the following statements best describes the theory of comparative advantage?

Correct AnswerverifiedShow Answer

A favorable balance of trade occurs when the value of a nation's exports exceeds its imports.

Correct AnswerverifiedShow Answer

Although it has experienced persistent social unrest,multinationals have shown interest in Russia due to:

Correct AnswerverifiedShow Answer

Devaluation refers to a decline in the value of a nation's currency relative to other currencies.

Correct AnswerverifiedShow Answer

After finishing college,Nathan joined his uncle's company in Miami,FL,a company that buys bauxite,copper,and other minerals from the country of Chile,and brings them into the U.S.Everyday,he brokers trades with mines in Chile.His uncle's company is in the export business.

Correct AnswerverifiedShow Answer

When U.S.firms choose to hire skilled and unskilled workers in other countries to produce goods and services,rather than producing them in the United States,we refer to this as _________.

Correct AnswerverifiedShow Answer

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

Correct AnswerverifiedShow Answer

The value of Chinese exports coming to the United States is greater than the value of goods China buys from the United States.This results in a U.S.trade deficit with China.

Correct AnswerverifiedShow Answer

Nikkei Auto Parts testified before Congress defending the company against an accusation that it was dumping auto parts on the U.S.market.In her testimony,the president claimed ________________.Using traditional guidelines,Congress determined that Nikkei was not dumping.

Correct AnswerverifiedShow Answer

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Comparative advantage theory states that...
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