C211 Pre-Assessment Study Guide PDF

**C211 Pre-Assessment Study Guide** **J. Coleman** **10.28.2024** **Business Decision Making in the Global Environment - 30% of assessment** **Competent** **International Trade and Foreign Exchange Market\ ** **Globalization** Correct 1. **One view of globalization claims that human civiliz...

**C211 Pre-Assessment Study Guide** **J. Coleman** **10.28.2024** **Business Decision Making in the Global Environment - 30% of assessment** **Competent** **International Trade and Foreign Exchange Market\ ** **Globalization** Correct 1. **One view of globalization claims that human civilization has always had some type of globalization. Which view is it?** ----------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------- ----------- -------------------------------- The long-run historical view Checkmark  The pendulum view The business-over-culture view The unique-role view ----------------------------------------------------------------------------- **\ The benefit attributed to firms that enter a market before other firms in the same market segment is best described by which term?** -------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------- ----------- -------------------------------- First-mover advantage Checkmark  Trade advantage Absolute advantage Scale advantage -------------------------------------------------------------------- Correct 3. **What is opportunity cost?** ---------------------------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------------------------------------------- ----------- -------------------------------- The lost potential from pursuing one activity at the expense of another activity, given the alternatives Checkmark  The extent to which different countries possess various factors of production such as labor, land, and technology A government payment to a domestic firm A net loss that occurs in an economy as a result of tariffs ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Mistake 4. **What is one of the OLI advantages outlined by John Dunning for why firms become multinational enterprises by engaging in foreign direct investment?** ------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** -------------------------------------- -------------------------------- ------------ Internalization advantages Checkmark Litigation advantages  International competition advantages Online business advantages ------------------------------------------------------------------------------------ Correct 5. **In which situation is the dodger strategy appropriate for responding to MNEs?** --------------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------------------------------ ----------- -------------------------------- There is high industry pressure to globalize, and competitive assets are customized to home markets. Checkmark  There is low industry pressure to globalize, and competitive assets are transferable abroad. There is low industry pressure to globalize, and competitive assets are customized to home markets. There is high industry pressure to globalize, and competitive assets are transferable abroad. --------------------------------------------------------------------------------------------------------------------------------------------------- Correct 6. **What are three characteristics of industries primed for collusion? Choose three.** ----------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------- ----------- -------------------------------- A small number of rivals Checkmark  A price leader Checkmark  Homogeneous products Checkmark  Heterogeneous products Low market commonality Low or no entry barriers ----------------------------------------------------------------------- **International Trade and Foreign Exchange Market** Correct 7. **What are weaknesses of the theory of mercantilism? Choose two.** --------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------------------------ ----------- -------------------------------- The theory leads to inefficient allocation of resources. Checkmark  Application of the theory reduces the wealth of the nation in the long run. Checkmark  The theory invites all kinds of industries to claim they are strategic. When one nation is absolutely inferior to another, the theory is unable to provide any advice. The theory has not been comprehensively tested. Many new products are now launched simultaneously around the world. --------------------------------------------------------------------------------------------------------------------------------------------- Correct 8. **What is the bandwagon effect?** -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------------------------------------------------------------------------------- ----------- -------------------------------- The movement of investors in the same direction at the same time Checkmark  A theory suggesting that the price for identical products sold in different countries must be the same in the absence of trade barriers The idea that a country\'s exchange rate is an indicator of socioeconomic well-being The gain from taking advantage of inefficient exchange rates -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Correct 9. **A country has seen a decrease in inflation. What is the effect on the country\'s currency exchange rate?** --------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------ ----------- -------------------------------- It increases. Checkmark  It decreases. It remains the same. It changes, but in an unknown direction. --------------------------------------------------------------------------------------- Correct 10. **What is one of the three primary types of foreign exchange transactions?** ------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------- ----------- -------------------------------- Spot transactions Checkmark  Straddles Rooted transactions Covered calls ------------------------------------------------------------------ Correct 11. **Who are the primary and largest participants in the foreign exchange market?** ------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------------- ----------- -------------------------------- Large international banks Checkmark  Individual investors Governments Local banks ------------------------------------------------------------------------ Correct 12. **Which company has a natural resource-seeking strategic goal?** --------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------------------ ----------- -------------------------------- A company searching for a location where there is an abundance of oil Checkmark  A company searching for a location where there are several other ground-breaking firms A company searching for a location where the cost of unskilled labor is low A company searching for a location where there is a culture of technological advancement --------------------------------------------------------------------------------------------------------------------------------------- Correct 13. **Which entrant is able to erect significant barriers for other entrants?** ------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------------- ----------- -------------------------------- First mover Checkmark  Frequent mover Late mover Paired mover ------------------------------------------------------------- Correct 14. **Direct exports have which advantage?** ----------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------------------------------------------------------- ----------- -------------------------------- Capitalization of economies of scale in production in the home country Checkmark  An ability to tap into the best locations for certain innovations at low costs Avoidance of export processes An ability to focus primarily on production ----------------------------------------------------------------------------------------------------------------------------- Mistake 15. **What are examples of equity modes of entry? Choose three.** ------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** --------------------- -------------------------------- ------------ Strategic alliances Checkmark Greenfields  Checkmark Acquisitions  Checkmark Indirect exports Franchising  R&D contracts ------------------------------------------------------------------- **Political and Economic Forces - 20% of assessment** **Political and Economic Forces\ ** Correct 16. **Which pillar of formal institutions represents the coercive power of governments?** --------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------ ----------- -------------------------------- Regulatory Checkmark  Moral Protective Informal --------------------------------------------------------- Correct 17. **What are represented by formal institutions?** ------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------- ----------- -------------------------------- Laws Checkmark  Norms Cultures Ethics ------------------------------------------------------- Correct 18. **What is the necessity of making sensible decisions in the absence of complete information?** ------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------------------- ----------- -------------------------------- Bounded rationality Checkmark  Narrow selection Modest determination Restricted analysis ------------------------------------------------------------------- Correct 19. **Managers and firms rationally pursue their interests and make choices within institutional constraints. This is one of the two core propositions underpinning an institution-based view of global business. Which situation illustrates this proposition?** ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------- -------------------------------- When the minimum wage increases in a country, a major multinational moves most of its production to another country because the cost of labor is substantially lower. Checkmark  Two failing banks are pursuing the option of being acquired by another institution. One bank is able to leverage political relationships to result in a successful acquisition. The other bank pursues no such political solution and eventually files for bankruptcy. Government corruption is rampant in a particular country, leading to a high cost of doing business. However, some smaller companies have figured out how to legally evade the most fraudulent abuses, and for them the cost of doing business becomes much cheaper. For this reason, the companies stay and have a lucrative decade. Because the minimum wage laws do not guarantee a livable income for most people, a major multinational company commits to ensuring a wage that is much higher. In fact, it has pledged to pay enough to get a single-income family at twice the accepted poverty line. It does this because the CEO and Board of Directors have adopted a core moral tenant about just wages and fair treatment of employees. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Correct 20. **Which characteristics are attributed to a democracy? Choose three** ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------------------------------------------------------------------------------------------------- ----------- -------------------------------- It prizes an individual's right to freedom of expression and organization. Checkmark  It extends the right to organize economically to domestic and foreign individuals and firms. Checkmark  It contains some political risk, but risk that is qualitatively lower than in other political systems. Checkmark  It can and often does lead to nationalization (expropriation) of foreign assets. It often results in higher risk associated with political changes that may negatively impact domestic and foreign firms. It delegates absolute political control over the population to one person or party. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- Correct 21. **What is a characteristic of common law as compared to civil law?** ---------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------- ----------- -------------------------------- Common law is more reliant on precedents. Checkmark  Common law covers issues with more comprehensive law codes. Common law has laws that are more defined. Common law has judges with less interpretational power. ---------------------------------------------------------------------------------------------------------- Correct 22. **Which protection of intellectual property is used for the design of a logo?** -------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------- ----------- -------------------------------- Trademark Checkmark  Patent Copyright Title -------------------------------------------------------- Correct 23. **What are examples of intellectual property? Choose two.** ----------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------- ----------- -------------------------------- A patent Checkmark  A trademark Checkmark  A parcel of land A factory An office A natural resource ----------------------------------------------------------------- Correct 24. **What is a characteristic of a market economy?** ------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------------------------------------------------------------------------------- ----------- -------------------------------- It involves the government in a hands-off level approach known as laissez-faire. Checkmark  It gives the government the primary authoritative role in the economy. It leaves the planning of supply, demand, and pricing to the government. It delegates ownership of all factors of production to the government. ------------------------------------------------------------------------------------------------------------------------------- Correct 25. **What is a characteristic of a market economy?** -------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------------------- ----------- -------------------------------- Factors of production are privately owned. Checkmark  Factors of production are government-owned or state-owned. Supply, demand, and pricing are planned by the government. It is defined by a government taking the authoritative role in the economy. -------------------------------------------------------------------------------------------------------------------------- **Economic Decision Making by Firms and Consumers - 22% of assessment** **Firm Behavior Under Different Market Structures** Correct 26. **The formula \"fixed costs (FC) + variable costs (VC)\" represents which quantity?** -------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------- ----------- -------------------------------- Total cost (TC) Checkmark  Average variable cost (AVC) Marginal cost (MC) Explicit cost (EC) -------------------------------------------------------------------------- Correct 27. **What is the definition of marginal cost?** ---------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------- ----------- -------------------------------- The increase in cost that arises from producing an additional unit of output Checkmark  Costs that do not vary with output quantity divided by the quantity of output The market value of the inputs a firm uses in production The amount that a firm pays to buy inputs ---------------------------------------------------------------------------------------------------------------------------- Correct 28. **The marginal cost of producing a computer is \$600, but the marginal revenue is \$1,000.What is the best action for the respective firm?** -------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------- ----------- -------------------------------- Increase production. Checkmark  Exit the market altogether. Pause production. Shut down in the short run. -------------------------------------------------------------------------- Correct 29. **When is it best for a firm to increase production?** ---------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------- ----------- -------------------------------- When marginal revenue is greater than marginal costs Checkmark  When marginal revenue is less than marginal cost When total revenue falls short of total variable costs When the price per unit is less than the average total cost ---------------------------------------------------------------------------------------------------------- Correct 30. **What are common types of barriers to entry that can cause a monopoly? Choose two.** ----------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------------------------------------------------- ----------- -------------------------------- A single firm owning a key resource Checkmark  Economies of scale in the production process Checkmark  Employee unions A firm purchasing competitors Government regulations prohibiting foreign investments in domestic firms Elastic demand curves ----------------------------------------------------------------------------------------------------------------------- Correct 31. **In a monopoly, which statements are likely true? Choose two.** ------------------------------------------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------------------------------------------------------------- ----------- -------------------------------- One seller offers a unique good for which there are no close substitutes. Checkmark  There are barriers to entry into the market. Checkmark  There are many buyers and sellers. Goods are identical. There is free entry and exit. Buyers and sellers are price-takers. ------------------------------------------------------------------------------------------------------------------------ Correct 32. **Which statement is true for a monopoly firm, but not a competitive firm?** -------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------- ----------- -------------------------------- The marginal revenue is less than its price. Checkmark  Profit is maximized when marginal revenue equals marginal cost. The marginal revenue equals its price. Price equals marginal cost. -------------------------------------------------------------------------------------------------------------- Correct 33. **What are characteristics of monopolistic competition? Choose three.** ---------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------- ----------- -------------------------------- Many sellers Checkmark  Product differentiation Checkmark  Free entry and exit Checkmark  Difficult entry One product One seller ---------------------------------------------------------------------- Correct 34. **In an oligopoly with an initial agreement to maximize total profit, which statements might a firm motivated by self-interest likely make? Choose three.** -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------------------------------------------------------------------------------- ----------- -------------------------------- \"If my fellow firms live up to the agreement, I am better off raising production.\" Checkmark  \"If my fellow firms fail to live up to the agreement and raise production, I am better off raising production myself.\" Checkmark  \"Regardless of what my fellow firms do, I am better off raising production beyond the agreed-to level.\" Checkmark  \"Regardless of what my fellow firms do, I am better off sticking with the agreed-to level of production.\" \"If my fellow firms live up to the agreement, I am better off also living up to the agreement.\" \"If my fellow firms fail to live up to the agreement and raise production, I am still better off adhering to the original agreement.\" -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Correct 35. **What is a key feature of an oligopoly? ** ----------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------------------------------------- ----------- -------------------------------- An oligopoly represents a prisoner\'s dilemma. Checkmark  Each firm takes the market price as given. There is one seller. Each firm produces a different product from the other firms. ----------------------------------------------------------------------------------------------------------- **Consumer Behavior** Correct 36. **What are properties of a typical indifference curve? Choose two.** --------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------ ----------- -------------------------------- Higher indifference curves are preferred to lower ones. Checkmark  Indifference curves do not cross. Checkmark  Indifference curves are bowed outward. Indifference curves slope upward. All indifference curves will eventually cross one another. Lower indifference curves are preferred to higher ones. --------------------------------------------------------------------------------------------------------- **Microeconomic and Macroeconomic Principles - 16% of assessment** **Microeconomic Principles\ ** Correct 37. **Which changes increase demand? Choose two.** ------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------------------------------------------------------------- ----------- -------------------------------- An increase in the price of a substitute Checkmark  A decrease in the price of a complement Checkmark  An expectation of lower income in the future for a normal good A reduction in income for a normal good A reduction in the price of a substitute An expectation of lower prices for a normal good in the future ------------------------------------------------------------------------------------------------------------- Correct 38. **What is one characteristic of a market surplus?** -------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------- ----------- -------------------------------- The quantity supplied exceeds the quantity demanded. Checkmark  There is upward pressure on the price. Price is less than the equilibrium price. The quantity demanded is greater than the equilibrium quantity. -------------------------------------------------------------------------------------------------------------- Correct 39. **When demand decreases and supply stays the same, what happens to the equilibrium point of price and quantity? Choose two.** ------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ---------------------------- ----------- -------------------------------- Quantity decreases. Checkmark  Price decreases. Checkmark  Price increases. Quantity remains the same. Quantity increases. Price remains the same. ------------------------------------------------------------------------- Correct 40. **If the demand for a good is inelastic, what is true?** -------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------------- ----------- -------------------------------- The quantity demanded responds only slightly to changes in the price. Checkmark  Total revenue decreases with a change in price in either direction. Price and total revenue move in opposite directions. The quantity demanded responds substantially to changes in the price. -------------------------------------------------------------------------------------------------------------------- Correct 41. **What is an example of goods that tend to have negative cross-price elasticities?** ----------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------- ----------- -------------------------------- Complements Checkmark  Goods priced above equilibrium Normal goods Shortage goods ----------------------------------------------------------------------------- **Macroeconomic Principles** Correct 42. **In order to increase the money supply, what does the Fed do?** ------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------------------------- ----------- -------------------------------- Buys bonds from the public Checkmark  Raises the discount rate Sells stock shares in the open market Lowers the bond rate ------------------------------------------------------------------------------------ Correct 43. **What happens when the Fed increases the money supply?** ---------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------------------------------------------- ----------- -------------------------------- The aggregate-demand curve shifts to the right. Checkmark  The aggregate-demand curve shifts down. The quantity of goods and services demanded for one specific price decreases. The efficiency of market corrections is reduced. ---------------------------------------------------------------------------------------------------------------------------- Correct 44. **How does the Fed lower the federal funds rate?** -------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------- ----------- -------------------------------- By purchasing government bonds Checkmark  By selling shares of stock By selling government bonds By increasing government spending -------------------------------------------------------------------------------- **Assessing Global Economic Performance and International Trade - 12% of assessment** **Measuring Economic Performance** Mistake 45. **Which statement about consumer surplus is true?** ------------------------------------------------------------------------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** -------------------------------------------------------------------------------------------------------- -------------------------------- ------------ It is a good measure of economic well-being if policymakers want to satisfy the preferences of buyers. Checkmark It is the same for any consumer at each specific point on the demand curve. It reaches its maximum value when the demand and supply in a market are at equilibrium.  It leads to market inefficiencies when it reaches a value too low. ------------------------------------------------------------------------------------------------------------------------------------------------------ Mistake 46. **What is true about producer surplus?** --------------------------------------------------------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------------------------------------------------------------- -------------------------------- ------------ It is used to measure the well-being of sellers. Checkmark It is the same for any producer at each specific point on the supply curve. It reaches its maximum value when the demand and supply in a market are at equilibrium.  It leads to market inefficiencies when it reaches a value that is too low. --------------------------------------------------------------------------------------------------------------------------------------- Correct 47. **Which quantity measures the market value of all final goods and services produced within a country in a given period of time?** -------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ----------------------------------- ----------- -------------------------------- Gross domestic product (GDP) Checkmark  Net domestic product (NDP) Net national product (NNP) Cumulative domestic product (CDP) -------------------------------------------------------------------------------- Correct 48. **Which transaction is included in the consumption component of GDP?** ---------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** ------------------------------------------- ----------- -------------------------------- A person pays for a haircut. Checkmark  A business buys computer software. A business buys an office building. A public schoolteacher receives a salary. ---------------------------------------------------------------------------------------- International Trade Correct 49. **An import tariff is implemented on apples. What is the effect on domestic government revenue?** ----------------------------------------------------------------------------------------- **Your\ **Correct\ Answer** Answer** -------------------------------------------- ----------- -------------------------------- It increases. Checkmark  It decreases. It changes depending on market conditions. It does not change. ----------------------------------------------------------------------------------------- Correct 50. **What is true about tariffs? ** ------------------------------------------------------------------------------------------ **Your\ **Correct\ Answer** Answer** --------------------------------------------- ----------- -------------------------------- They allow the government to raise revenue. Checkmark  They leave domestic producer worse off. They increase total surplus. They increase the quantity of imports. ------------------------------------------------------------------------------------------