C211 Pre-Assessment Study Guide PDF 10/28/2024

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 glo...

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 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 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 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 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. There is low industry pressure to globalize, and competitive assets are transferable abroad.  YOUR CORRECT ANSWER ANSWER 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 A price leader Homogeneous products 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. Application of the theory reduces the wealth of the nation in the long run. The theory invites all kinds of industries to claim they are strategic.  YOUR CORRECT ANSWER ANSWER 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 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. 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 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 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  YOUR CORRECT ANSWER ANSWER 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 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 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 Greenfields Acquisitions 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 Moral Protective Informal Correct 17. What are represented by formal institutions? YOUR CORRECT ANSWER ANSWER Laws  YOUR CORRECT ANSWER ANSWER 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 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. 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.  YOUR CORRECT ANSWER ANSWER 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. It extends the right to organize economically to domestic and foreign individuals and firms. It contains some political risk, but risk that is qualitatively lower than in other political systems. 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. Common law covers issues with more comprehensive law codes. Common law has laws that are more defined.  YOUR CORRECT ANSWER ANSWER 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 Patent Copyright Title Correct 23. What are examples of intellectual property? Choose two. YOUR CORRECT ANSWER ANSWER A patent A trademark 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. 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. 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)  YOUR CORRECT ANSWER ANSWER 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 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. 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 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 Economies of scale in the production process 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.  YOUR CORRECT ANSWER ANSWER There are barriers to entry into the market. 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. 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 Product differentiation Free entry and exit  YOUR CORRECT ANSWER ANSWER 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." "If my fellow firms fail to live up to the agreement and raise production, I am better off raising production myself." "Regardless of what my fellow firms do, I am better off raising production beyond the agreed-to level." "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.  YOUR CORRECT ANSWER ANSWER 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. Indifference curves do not cross. 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  YOUR CORRECT ANSWER ANSWER A decrease in the price of a complement 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. 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. Price decreases. Price increases.  YOUR CORRECT ANSWER ANSWER 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. 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 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 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. 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 By selling shares of stock  YOUR CORRECT ANSWER ANSWER 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. 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. 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) 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. 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. It decreases.  YOUR CORRECT ANSWER ANSWER 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. They leave domestic producer worse off. They increase total surplus. They increase the quantity of imports.