C 211 Global Economics for Managers Brainstorming
Questions and Their Correct Solutions Graded 100%
Pass
"Evolutionary" view on globalization - CORRECT ANSWER ✔✔ -A long-run historical
evolution since the dawn of human history
"New" view on globalization - CORRECT ANSWER ✔✔ -A force sweeping through the world
in recent times.
"Pendulum" view on globalization - CORRECT ANSWER ✔✔ -One that swings from one
extreme to another from time to time
3 types of elasticity, their equations, purpose and outcomes - CORRECT ANSWER ✔✔ -(1)
Price elasticity of demand - % chg in Q D / % chg in P
(2) Income elasticity - % chg in Q D / % chg in income
(3) Cross-price elasticity - % chg in Q D Good 1/% chg in Good #2 P
Absolute advantage - CORRECT ANSWER ✔✔ -The economic advantage one nation enjoys
that is superior to other nations
Benefits to a country receiving FDI - CORRECT ANSWER ✔✔ -Capital Inflow, Technology
Spillover, Advanced Management Know-How, Job creation
Budget constraint - CORRECT ANSWER ✔✔ -The consumption bundles that the consumer can
afford.
,Civil law - CORRECT ANSWER ✔✔ -Law that uses comprehensive statutes and codes as a
primary means to form legal judgments.
Classical theories of international trade - CORRECT ANSWER ✔✔ -Mercantilism, Absolute
advantage, and Comparative advantage
Classical theory view - CORRECT ANSWER ✔✔ -Static
Cognitive pillar - CORRECT ANSWER ✔✔ -The internalized, taken-for-granted values and
beliefs that guide behavior. (beliefs between right/wrong)
Command economy - CORRECT ANSWER ✔✔ -One that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply, demand, and
pricing are planned by the government.
Common law - CORRECT ANSWER ✔✔ -Law shaped by precedents and traditions from
previous judicial decisions.
Comparative advantage - CORRECT ANSWER ✔✔ -The advantage one economic activity
nation enjoys in comparison with other nations (relative, not absolute)
Consumer surplus - CORRECT ANSWER ✔✔ -The amount a buyer is willing to pay for a good
minus the amount the buyer actually pays for it
Costs to a country receiving FDI - CORRECT ANSWER ✔✔ -Loss of Sovereignty, Adverse
effects on competition,
Capital outflow.
, Cross-price elasticity - CORRECT ANSWER ✔✔ -A measure of how much the quantity
demanded of one good responds to a change in the price of another good. Computed as the
percentage change in quantity demanded of the first good divided by the percentage change in
price of the second good. Substitutes=positive cross-price elasticity; complements=negative
cross-price elasticity.
Currency hedging - CORRECT ANSWER ✔✔ -A way to protect traders and investors from
being exposed to the fluctuations of the spot rate
Dead weight loss. - CORRECT ANSWER ✔✔ -The fall in total surplus that results from a
market distortion, such as a tax (new equilibrium price that is settled for the transaction will be
higher and therefore some burden of this will be passed on to the consumer)
Demand curve for a monopolistic market - CORRECT ANSWER ✔✔ -Downward-sloping
Demand curve for a perfectly competitive firm - CORRECT ANSWER ✔✔ -Horizontal line
Democracy - CORRECT ANSWER ✔✔ -Citizens elect representatives to govern the country on
their behalf.
Describe the basic distinctions between the market models with respect to: number of market
participants, type of product being marketed, ease of entry/exit into the market and the
prevalence of advertising/marketing - CORRECT ANSWER ✔✔ -Monopoly and Oligopoly
have one to few firms, with limited products (cable TV), entry is difficult, and advertising is a
natural feature. Monopolistic competition/perfect competition have many firms, mono comp has
differentiated products (novels/movies) and perfect comp has identical products, entry is easy,
and spend very little on advertising.
Questions and Their Correct Solutions Graded 100%
Pass
"Evolutionary" view on globalization - CORRECT ANSWER ✔✔ -A long-run historical
evolution since the dawn of human history
"New" view on globalization - CORRECT ANSWER ✔✔ -A force sweeping through the world
in recent times.
"Pendulum" view on globalization - CORRECT ANSWER ✔✔ -One that swings from one
extreme to another from time to time
3 types of elasticity, their equations, purpose and outcomes - CORRECT ANSWER ✔✔ -(1)
Price elasticity of demand - % chg in Q D / % chg in P
(2) Income elasticity - % chg in Q D / % chg in income
(3) Cross-price elasticity - % chg in Q D Good 1/% chg in Good #2 P
Absolute advantage - CORRECT ANSWER ✔✔ -The economic advantage one nation enjoys
that is superior to other nations
Benefits to a country receiving FDI - CORRECT ANSWER ✔✔ -Capital Inflow, Technology
Spillover, Advanced Management Know-How, Job creation
Budget constraint - CORRECT ANSWER ✔✔ -The consumption bundles that the consumer can
afford.
,Civil law - CORRECT ANSWER ✔✔ -Law that uses comprehensive statutes and codes as a
primary means to form legal judgments.
Classical theories of international trade - CORRECT ANSWER ✔✔ -Mercantilism, Absolute
advantage, and Comparative advantage
Classical theory view - CORRECT ANSWER ✔✔ -Static
Cognitive pillar - CORRECT ANSWER ✔✔ -The internalized, taken-for-granted values and
beliefs that guide behavior. (beliefs between right/wrong)
Command economy - CORRECT ANSWER ✔✔ -One that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply, demand, and
pricing are planned by the government.
Common law - CORRECT ANSWER ✔✔ -Law shaped by precedents and traditions from
previous judicial decisions.
Comparative advantage - CORRECT ANSWER ✔✔ -The advantage one economic activity
nation enjoys in comparison with other nations (relative, not absolute)
Consumer surplus - CORRECT ANSWER ✔✔ -The amount a buyer is willing to pay for a good
minus the amount the buyer actually pays for it
Costs to a country receiving FDI - CORRECT ANSWER ✔✔ -Loss of Sovereignty, Adverse
effects on competition,
Capital outflow.
, Cross-price elasticity - CORRECT ANSWER ✔✔ -A measure of how much the quantity
demanded of one good responds to a change in the price of another good. Computed as the
percentage change in quantity demanded of the first good divided by the percentage change in
price of the second good. Substitutes=positive cross-price elasticity; complements=negative
cross-price elasticity.
Currency hedging - CORRECT ANSWER ✔✔ -A way to protect traders and investors from
being exposed to the fluctuations of the spot rate
Dead weight loss. - CORRECT ANSWER ✔✔ -The fall in total surplus that results from a
market distortion, such as a tax (new equilibrium price that is settled for the transaction will be
higher and therefore some burden of this will be passed on to the consumer)
Demand curve for a monopolistic market - CORRECT ANSWER ✔✔ -Downward-sloping
Demand curve for a perfectly competitive firm - CORRECT ANSWER ✔✔ -Horizontal line
Democracy - CORRECT ANSWER ✔✔ -Citizens elect representatives to govern the country on
their behalf.
Describe the basic distinctions between the market models with respect to: number of market
participants, type of product being marketed, ease of entry/exit into the market and the
prevalence of advertising/marketing - CORRECT ANSWER ✔✔ -Monopoly and Oligopoly
have one to few firms, with limited products (cable TV), entry is difficult, and advertising is a
natural feature. Monopolistic competition/perfect competition have many firms, mono comp has
differentiated products (novels/movies) and perfect comp has identical products, entry is easy,
and spend very little on advertising.
