WGU C211 Global Economics for Managers
Question and Answer | Updated Verified
Answers | Study Guide Pack
• What happens if demand increases? -✓✓Price ↑, Quantity ↑
• What happens if demand decreases? -✓✓Price ↓, Quantity ↓
• What happens if supply increases? -✓✓Price ↓, Quantity ↑
• What happens if supply decreases? -✓✓Price ↑, Quantity ↓
• What should a firm do if MR > MC? -✓✓Increase production
• What should a firm do if MR < MC? -✓✓Decrease production
• What happens when inflation increases? -✓✓Purchasing power ↓
• What happens to currency if inflation decreases? -✓✓Currency value ↑
• What happens when interest rates increase? -✓✓Borrowing ↓, spending ↓
• What is GDP? -✓✓Total value of goods/services produced
• What happens when a currency strengthens? -✓✓Imports ↑, exports ↓
• What happens when a currency weakens? -✓✓Exports ↑, imports ↓
• What is a tariff? -✓✓Tax on imports → imports ↓
• What is a quota? -✓✓Limit on imports
• What is a subsidy? -✓✓Government support for domestic firms
• What is a trade surplus? -✓✓Exports > Imports
• What is a trade deficit? -✓✓Imports > Exports
• What is comparative advantage? -✓✓Producing goods at lowest opportunity cost
• What is a first-mover advantage? -✓✓Entering early to gain advantage
, • What is a late-mover advantage? -✓✓Learning from first movers
• Why do firms seek foreign markets? -✓✓High demand
• Why do firms seek efficiency? -✓✓Lower costs
• What is exporting vs FDI? -✓✓Export = low risk; FDI = high control
• What is a joint venture? -✓✓Shared ownership between firms
• What is FDI? -✓✓Direct investment in foreign operations
• What is Ownership advantage (O)? -✓✓Firm's unique resources
• What is Location advantage (L)? -✓✓Benefits of specific country
• What is Internalization (I)? -✓✓Keep operations inside firm
• What are institutions? -✓✓Rules of the game (laws, culture, norms)
• What happens when institutions are weak? -✓✓More uncertainty, more risk
• What is the difference between formal and informal institutions? -✓✓Formal = laws;
Informal = culture/norms
• What is the difference between a market economy and a command economy? -
✓✓Market = supply/demand; Command = government control
• What is liability of foreignness? -✓✓Disadvantage foreign firms face
• What is political risk? -✓✓Risk from government changes
• What is cultural distance? -✓✓Differences between countries' cultures
• What affects exchange rates? -✓✓Inflation, interest rates, and demand for currency
• What does a tariff do to domestic firms? -✓✓Protects them from foreign competition
• What is protectionism? -✓✓Government actions to limit imports
• What is Marginal Revenue? -✓✓The extra money a firm earns from selling one more
unit
Question and Answer | Updated Verified
Answers | Study Guide Pack
• What happens if demand increases? -✓✓Price ↑, Quantity ↑
• What happens if demand decreases? -✓✓Price ↓, Quantity ↓
• What happens if supply increases? -✓✓Price ↓, Quantity ↑
• What happens if supply decreases? -✓✓Price ↑, Quantity ↓
• What should a firm do if MR > MC? -✓✓Increase production
• What should a firm do if MR < MC? -✓✓Decrease production
• What happens when inflation increases? -✓✓Purchasing power ↓
• What happens to currency if inflation decreases? -✓✓Currency value ↑
• What happens when interest rates increase? -✓✓Borrowing ↓, spending ↓
• What is GDP? -✓✓Total value of goods/services produced
• What happens when a currency strengthens? -✓✓Imports ↑, exports ↓
• What happens when a currency weakens? -✓✓Exports ↑, imports ↓
• What is a tariff? -✓✓Tax on imports → imports ↓
• What is a quota? -✓✓Limit on imports
• What is a subsidy? -✓✓Government support for domestic firms
• What is a trade surplus? -✓✓Exports > Imports
• What is a trade deficit? -✓✓Imports > Exports
• What is comparative advantage? -✓✓Producing goods at lowest opportunity cost
• What is a first-mover advantage? -✓✓Entering early to gain advantage
, • What is a late-mover advantage? -✓✓Learning from first movers
• Why do firms seek foreign markets? -✓✓High demand
• Why do firms seek efficiency? -✓✓Lower costs
• What is exporting vs FDI? -✓✓Export = low risk; FDI = high control
• What is a joint venture? -✓✓Shared ownership between firms
• What is FDI? -✓✓Direct investment in foreign operations
• What is Ownership advantage (O)? -✓✓Firm's unique resources
• What is Location advantage (L)? -✓✓Benefits of specific country
• What is Internalization (I)? -✓✓Keep operations inside firm
• What are institutions? -✓✓Rules of the game (laws, culture, norms)
• What happens when institutions are weak? -✓✓More uncertainty, more risk
• What is the difference between formal and informal institutions? -✓✓Formal = laws;
Informal = culture/norms
• What is the difference between a market economy and a command economy? -
✓✓Market = supply/demand; Command = government control
• What is liability of foreignness? -✓✓Disadvantage foreign firms face
• What is political risk? -✓✓Risk from government changes
• What is cultural distance? -✓✓Differences between countries' cultures
• What affects exchange rates? -✓✓Inflation, interest rates, and demand for currency
• What does a tariff do to domestic firms? -✓✓Protects them from foreign competition
• What is protectionism? -✓✓Government actions to limit imports
• What is Marginal Revenue? -✓✓The extra money a firm earns from selling one more
unit
