Exam 2024 with Verified Solutions
Which political view of foreign direct investment (FDI) is most widely used by governments in the current
international business environment? - Answer -Protectionism
Which factors credit the degree of rivalry between a pair of competitors? 2 choices - Answer -Market
Commonality
Cost Structure
Which factors credit how local firms in emerging economics will respond to multinational competitors? -
Answer -Competitive assets and industry pressures to globalize
During which stage of the product life cycle do sales and profits gradually increase before seeing more
dramatic increases? - Answer -Growth
Which factor determines the foreign exchange rate of any currency? - Answer -Supply and demand for
the currency
Which risk must corporation minimize if it is to effectively manage short-term currency fluctuations? -
Answer -Transaction Risk
Which policy does a country use to determine the exchange rate of their currency in relationship to
another country's currency if they do not rely on market forces? - Answer -Fixed Rate Policy
Which term refers to trading currencies and currency derivatives in order to earn profits and help make
prices efficient? - Answer -Brokering
Which type of advantage is gained by a company based on where it operates? - Answer -Location-
Specific
Who gains from erecting significant entry barriers for other entrants? - Answer -First Movers
Which strategy for entering into a foreign market has the lowest degree of risk? - Answer -Licensing
What is a non-equity mode involving some type of contractual agreement? - Answer -Licensing
After the Lehman Brothers collapse, the federal Reserve stood ready to lend financial institutions funds.
When the Federal reserve did this, it was acting in its role as a lender of last resort. Which type of group
has this role? - Answer -Non Governmental Organization
, What is the comprehensive free-trade settlement among Canada, US, and Mexico, that address issues of
protecting workers rights, the environment and reducing tariffs and non-tariff trade barriers? - Answer -
NAFTA
What is one of the core propositions underpinning an institution-based view of global business? -
Answer -Managers and corporations make rational decisions within their formal and informal framework
Which type of system allows businesses to be privately owned with a strong individualistic profit
orientation? - Answer -Market economy
Which legal system is based on a religious document and religious teachings? - Answer -Theocratic Law
Which type of good has well-established property rights? - Answer -Private Goods
Which activity disregards basic property rights? - Answer -Students play loud music in the open area
between dorms
What is one type of economy that uses the market system? - Answer -Mixed Economy
Which kind of outcome was Adam Smith referring to when describing the invisible hand? - Answer -
Market Outcomes
What does the value of the marginal product of labor for a perfectly competitive, profit maximizing firm
equal? - Answer -Wage
What is the change in total cost equal to? - Answer -Marginal Cost multiplied by change in quantity
Which condition must be satisfied for a competitive firm to shut down in a short run? - Answer -Total
variable costs are greater than total revenue
What will a competitive firm do in the short run if its average variable cost exceeds price? - Answer -It
will shut down
What is a characteristic of a monopoly demand curve? - Answer -It is the same as the market demand
curve
Which statement describes a monopoly's demand curve? - Answer -It is less elastic than a perfectly
competitive firms demand curve
What is the profit maximization condition for a monopoly? - Answer -Where marginal revenue equals
marginal cost
What is a characteristic of monopolistic competition? - Answer -Many firms sell differentiated products
How does self-interest influence each prisoner's decision in the prisoner's dilemma? - Answer -Neither
prisoner will confess