BUS 100 Chapter 3

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1. Ithilium, a European country, is able to produce more absolute advan-

electronics than Kilim, a North American country, tage over Kilim.
even though both countries use the same amount of
resources. Given this information, it can be deduced
that Ithilium has a(n):

2. The financial assistance offered by the World Bank False

usually comes in the form of high-interest loans.

3. Brentia, an East Asian country, exported goods worth balance of pay-

$50 million and imported goods worth $5 million in the ments surplus
last fiscal year. It also provided a loan of $25 million to
another country. In this scenario, Brentia most likely
had a _____ in the last fiscal year.

4. When the total value of a nation's exports is higher trade surplus

than the total value of its imports, that country has
a(n) _____.

5. Which of the following countries most likely has a An Asian coun-

comparative advantage? try that produces
quality automo-
biles with little
opportunity cost
compared to other
countries

6. Remurio Inc., an African multinational company, legal differences

wants to import raw materials from Infigerd, an Asian
country. However, the company can import only a cer-
tain quantity of raw materials because of trade restric-
tions imposed by Infigerd. In this scenario, Remurio
Inc. is most likely facing the barrier of _____.

7. The total value of the goods exported by Maulini, a trade deficit

South American country, in the last fiscal year was
lower in comparison to the total value of the goods
imported by it. Given this information, Maulini had a
_____ in the last fiscal year.

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8. In the fiscal year 2015-2016, Nescarto, an African balance of pay-
country, imported goods worth $18 million and export- ments surplus
ed goods worth $20 million. It also borrowed $40 mil-
lion from other countries. In this scenario, Nescarto
had a _____ during 2015-2016.

9. Quistor Inc., a company based in the country of Walte- foreign outsourc-

fa, contracts with a small-scale supplier in the country ing
of Carlesna to manufacture its computers and tablets
across the world. This strategy by Quistor Inc. illus-
trates _____.

10. The government of Lebitz, a European country, learns A tariff

that low-priced textile imports from Pruneia, an Asian
country, are affecting the sales of domestic textile
companies. The Lebitzian government decides to levy
a 6% tax on all textile goods imported from other
countries. In this scenario, which of the following
trade restrictions does the Lebitzian government im-
pose?

11. In foreign licensing, licensors run the risk that uneth- True
ical licensees may become their competitors, using
information that they gained from the licensing agree-
ment.

12. Quotas are taxes levied against imports. False

13. Sloimekia can manufacture more of a certain kind of It enjoys an ab-

cloth than its neighboring countries, although they all solute advantage
have the same amount of resources for the cloth's in terms of the par-
production. In this scenario, which of the following ticular cloth it pro-
statements is true of Sloimekia? duces

14. CuberTech, an American electronics company, set up direct investment

its production facilities in Chuaga, an Asian coun-
try, because the workers in Chuaga work for about
one-third the pay of American workers. This substan-
tially lowered CuberTech's cost of production. This
scenario is an example of _____.
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15. In the context of the strategies for reaching global a. The foreign
markets, which of the following is a disadvantage of company needs to
foreign outsourcing? pay high wages to
the workers. b. The
adherence to eth-
ical standards by
foreign producers
is at risk. c. The
cost of production
becomes irrecov-
erable. d. The re-
turns on invest-
ment are dimin-
ished.

16. Umeron, a European country, wants to import 18 mil- quota

lion bales of cotton from Trumberton, an Asian coun-
try. However, Umeron is able to import only 10 million
bales because Umeron's import laws limit the amount
of cotton and jute that can be imported. In the given
scenario, the government of Umeron has imposed
a(n) _____ to restrict international trade.

17. A__________refers to the overage that occurs when balance of pay-

more money flows into a nation than out of that nation. ments surplus

18. __________refers to the unrestricted movement of a. Direct invest-

goods and services across international borders ment b. Free trade
c. Protectionism d.
Countertrade

19. Clark and Nestor start a catering business together. a. barter b. a

They sign a legal contract that states that the business strategic alliance
is owned by them. The agreement also states that they c. a partnership d.
will have an equal share in the profits of the business countertrade
and will be equally liable for any losses incurred by
the business. This scenario exemplifies _____.

20. Which of the following countries has a trade deficit?

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A European coun-
try that has a high-
er total value of im-
ports than exports

21. Inicell Inc., an American camera manufacturing com- tariff

pany, wanted to import a few camera parts from Ru-
elia, an Asian company. However, the American gov-
ernment passed a taxation law that stated that a tax
of 4% would be levied on all electronic imports. In
this scenario, the American government imposed a(n)
_____.

22. Consider an exchange rate situation in which 1 Indian A Japanese tourist

rupee equals 0.40 Japanese yen. Given this informa- can buy more
tion, which of the following statements is true? goods and ser-
vices in India.

23. Wichasha, an African country, exports barley and cot- the balance of
ton worth $100 million to Illema, a European coun- trade
try, and it imports sugarcane worth $25 million from
Illema. As such, the total value of Wichasha's exports
is higher than the total value of its imports. This dif-
ference between the value of Wichasha's exports and
imports is known as _____.

24. Nersina, a European country, exports petroleum and trade surplus

imports cotton and jute. In the current fiscal year, the
total value of Nersina's exports is higher than the total
value of its imports. In this scenario, Nersina most
likely has a _____

25. A firm that contracts with foreign producers has an True

obligation to ensure that those factories adhere to
ethical standards.

26. Regency Placade, a renowned European electronics Limited access to

company, wants to set up a subsidiary in Finim, an factors of produc-
Asian country. After conducting a survey, the com- tion
pany finds that Finim lacks the resources required
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for production. Therefore, Regency Placade decides
to abandon the idea. In this scenario, which of the fol-
lowing most likely affected Regency Placade's plan?

27. In the context of international trade, which of the fol- An Asian com-
lowing companies is facing the barrier of legal differ- pany that can
ences? only import a lim-
ited amount of
crude oil from an
Arab country be-
cause of interna-
tional trade restric-
tions

28. In the context of the strategies for reaching global It is the most ba-
markets, which of the following statements is true of sic level of interna-
exporting? tional market de-
velopment.

29. Vieorien, a company based in the country of Dannis- licensee

tel, has permitted a foreign company the rights to pro-
duce its products and to use the Vieorien trademark.
However, Vieorien does not have the authority or the
rights to dictate the business operations of the foreign
company. In this scenario, the foreign company that
Vieorien deals with is the _____

30. The balance of trade plays a central role in determin- True

ing the balance of payments.

31. Which of the following companies is involved in for- A European com-

eign licensing? pany that grants a
company in Asia
the rights to pro-
duce and sell its
products

32. Which of the following is a function of the Internation- Promoting global

al Monetary Fund (IMF)? trade

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33. __________refers to selling products in foreign na- Exporting
tions that have been produced or grown domestically

34. Resorto, a European country, exported sugar worth trade deficit

$600 million between 2015 and 2016 and imported tea
worth $750 million during the same period. In this
scenario, Resorto most likely had a _____ between
2015 and 2016

35. Grettzee, a musical instruments manufacturing com- Access to factors

pany, imports high-quality maple wood from Resum- of production
bro, a South Asian country where maple is found
in abundance. Which of the following is most likely
to have influenced Grettzee's decision to import raw
materials from Resumbro?

36. Nessi Bru, an American construction firm, and West a joint venture
Brook Inc., a Canadian construction firm, collaborated
on an infrastructure project to build a railway track
from Regina in Canada to Minneapolis in the United
States. They shared their resources, risks, and profits,
but they still functioned as two independent firms.
In this scenario, Nessi Bru and West Brook Inc. were
most likely involved in _____.

37. Boson Corp., an American software development direct investment

company, wants to expand its business in internation-
al markets. Therefore, it buys property in Greitch, a
South Asian country, and sets up a production facility
despite the high costs involved. In this scenario, Bo-
son Corp. is most likely involved in _____.

38. Nescat Autos, an automobile manufacturing compa- Reduced risk

ny, developed a secondary market for its products
in a foreign country. This allowed the company to
minimize its losses when its primary market failed to
generate enough revenue to benefit the company. In
this scenario, which of the following is most likely to
have influenced Nescat Autos's decision to set up a
market in another country?
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39. Alice, the global marketing director of a multinational Limited access to

electronic goods manufacturing firm, is assigned the factors of produc-
task of expanding her firm in new markets. She learns tion
that hiring labor is expensive and that the required
technical manufacturing equipment is unavailable in
the international market. In this scenario, which of the
following is most likely affecting the global trade of
Alice's firm?

40. Tanya Williams, the chief executive officer of Willister foreign franchising
Computers, believes that the firm is currently best
equipped to enter the market of Troyesna, a fast-devel-
oping country. The firm offers a small-scale producer
in Tryoesna the right to produce and market its goods
based on a set of specific operating functions and
requirements. This scenario of Willister Computers il-
lustrates

41. __________range from simple barter to a complex Individual counter-

web of exchanges that end up meeting the needs of trade agreements
multiple parties

42. Which of the following countries has a trade surplus? An Asian country
whose total value
of exports exceeds
its total value of
imports

43. Negacho, a food and beverage company, introduced a Inflow of innova-

new flavor of potato chips called South Indian Chill- tion
is. It received a positive response from consumers,
which prompted Brex Mex, another food company, to
introduce its own Szechuan flavored chips. In this
scenario, which of the following is most likely to have
influenced Brex Mex to produce a product similar to
Negacho's?

44. Chechinko, an African country, and Herito, an Asian Chechinko enjoys

country, use the same amount of resources to pro- an absolute ad-
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duce alcohol. Despite this, Chechinko is able to manu- vantage in terms
facture a higher quantity of alcohol than Herito. In this of alcohol produc-
context, which of the following statements is definitely tion, relative to
true of Chechinko? Herito.

45. Neminski, an Arab country, is renowned for its rich oil exporting
reserves. It earns approximately $1.3 billion annually
by selling crude oil to other countries. Given this in-
formation, Neminski is most likely involved in _____

46. In Fidaro, a North American country, punctuality is sociocultural dif-

considered a sign of integrity. On the other hand, in ferences
Gwary, an African country, punctuality is considered
a sign of anxiety and is given less importance. This
exemplifies:

47. Rubicon Inc., an American guitar manufacturing com- foreign outsourc-

pany, signed a contract with a supplier in Umreia, ing
an Asian country, to manufacture guitars. Rubicon
then imported these products and sold them in its
markets under its own brand name. Rubicon did this
because of the availability of cheap labor in Umreia
that substantially cut down Rubicon's cost of produc-
tion. In this scenario, Rubicon is most likely involved
in _____.

48. Despite their huge populations, China and India repre- False
sent a much smaller opportunity in terms of size and
economic growth.

49. The basic mission of the _____ is to promote global international Mon-
economic cooperation and stable growth etary Fund

50. The balance of trade is also referred to as counter- False

trade.

51. In the context of global trade, the__________is a mea- exchange rate

surement of the value of one nation's currency relative
to the currency of other nations

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52. Despite the growth rates in many high-population False
countries being weak, most of these nations remain
ahead of the United States in terms of development
and prosperity.

53. Elision Inc., an American software development com- Access to factors

pany, outsourced its support operations to Luzenza, of production
an Asian nation, because it found that Luzenza has
a large cohort of English-speaking college graduates
who are ready to work for one-fourth the pay of com-
parable American workers. Which of the following is
most likely to have influenced Elision Inc.'s decision
to outsource its support operations to Luzenza?

54. Brixbee Inc., a European electronics company, has foreign licensing

given a domestic firm in Lougard, an Asian country,
the rights to manufacture and market its product with-
in Lougard. In this scenario, Brixbee Inc. is most likely
involved in _____

55. In the context of foreign direct investment, which of It is a formal,

the following statements is true of a partnership? long-term agree-
ment.

56. In the context of barriers to international trade, _____ sociocultural dif-

include differences among countries in language, at- ferences
titudes, and values.

57. Nessi Bru, an American construction firm, and West joint venture
Brook Inc., a Canadian construction firm, collaborated
on an infrastructure project to build a railway track
from Regina in Canada to Minneapolis in the United
States. They shared their resources, risks, and profits,
but they still functioned as two independent firms.
In this scenario, Nessi Bru and West Brook Inc. were
most likely involved in _____.

58. Trade restrictions were created to:

59. Selected Answer:

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60. Incorrectc. build exporting opportunities through bet- protect national

ter relationships with other countries security interests

61. The _____ is an international cooperative of 188 mem- World Bank

ber countries, working together to reduce poverty in
the developing world.

62. Merticao, a French textile company, supplied most of reduced risk

its products to its primary market in Hestonia, a North
American nation. However, when Hestonia faced an
economic downturn and its citizens began to reduce
their expenditures, Merticao began to focus more on
its domestic market. As a result, Merticao was able
to survive the loss of its primary market because of
_____ in global trade..

63. In the context of global trade, which of the following It includes for-
statements is true of balance of payments? eign borrowing
and lending.

64. In the context of international trade, India, China, and they have a large
the Philippines attract multibillion-dollar investments cohort of techni-
because: cally skilled uni-
versity graduates
who work for about
one-fifth the pay of
comparable Amer-
ican workers.

65. Compared to the United States, China and India have: higher gross do-
mestic product
growth rates.

66. Vertiaplume, a drug manufacturing company, exports Reduced risk

its products to more than 15 countries around the
world. Regardless of reduced sales in one of these
countries, Vertiaplume is able to maintain its overall
profits. In the given scenario, which of the following

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is a reason behind Vertiaplume's ability to maintain its
overall profits?

67. In the context of competitive advantage, the value of False

the first-best choice represents the opportunity cost
of producing a second product.

68. Which of the following countries is involved in coun- An Asian coun-

tertrade? try that provides
sugarcane to an
African country in
exchange for jute

69. In the context of the strategies for reaching global Involvement of so-
markets, which of the following is a key risk of foreign cial responsibility
outsourcing?

70. Nipennie and Mirasa, two developing countries, countertrade

bartered cotton for jute rather than for currency. In this
scenario, the two countries engaged in _____.

71. Which of the following is the most costly form of Offshoring

foreign direct investment?

72. In the late 1970s, LarceCo, a tea manufacturing com- Countertrade

pany, entered the market of a developing country
called Fantesnia. As there was a lack of hard currency
in Fantesnia, LarceCo was involved in a barter system.
It exchanged its tea-based products for the local vod-
ka of Fantesnia. This scenario illustrates that LarceCo
had engaged in _____.

73. Which of the following countries exemplifies the con- An Asian country
cept of opportunity cost? that increases its
production of sug-
ar by decreasing
its production of
cocoa

74. False
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Companies that choose to export products to a for-
eign country spend more to enter that market than
companies that choose to build their own factories.

75. Quezi, an East Asian country, borrows $300 million Balance of pay-
from Muranico, a North American country, to fund ments
its infrastructure projects. Quezi exports petroleum
worth $700 million to Muranico and other countries.
Besides this, Quezi provides foreign aid worth $40
million. In this scenario, this flow of money into and
out of Quezi can be measured by _____.

76. Mora, an American jewelry manufacturing company, legal differences

wants to import diamonds from Renoria, an Asian
country. However, the officials in charge of the trade in
Renoria agree to formalize the transaction only if they
are paid a certain amount of money for their person-
al benefit. Since American businesses are prohibited
from offering bribes to any foreign nation, Mora has
to look to another exporter of diamonds. In the given
scenario, Mora is most likely facing the barrier of

77. Which of the following companies is engaged in im- A company that

porting? buys electronic
goods that are do-
mestically manu-
factured by other
countries

78. Prost was the first automobile company in the world Inflow of innova-
to introduce child safety locks in its vehicles. This tion
feature soon became a major selling point for con-
sumers all over the world. As a result, other automo-
bile companies began providing a similar feature in
their vehicles. In this scenario, which of the following
is most likely to have influenced other companies to
install child safety locks?

79. Who among the following is most likely to benefit in a

case where there is a weak dollar against a euro?
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John is an Amer-
ican who exports
goods to Europe.

80. Luchen Modo, a software development firm in Asia, Inflow of innova-

launched a new software for smartphones that al- tion
lowed users to remotely control certain functions
and features of their vehicles, such as ignition, wind-
shields, and headlights. The success of this technol-
ogy prompted other companies across the world to
produce similar software. In this scenario, which of
the following is most likely to have influenced other
companies to produce similar software?

81. Who among the following is most likely to benefit Ron is an Ameri-
when the dollar is strong and the euro is weak? can who is touring
Europe

82. Bresnee, a European automobile company, plans to sociocultural dif-

sell its automobiles in Lador, an Asian country. To ferences
do this, Bresnee has to make certain modifications
in its marketing strategy such as using the regional
language of Lador in its advertisements. Without such
changes, Bresnee would not be able to establish a
market in the country. In the given scenario, Bresnee
is most likely facing the barrier of _____.

83. In__________, firms either acquire foreign firms or direct investment

develop new facilities from the ground up in foreign
countries

84. Romernia, an Asian country, imported goods and ser- the balance of
vices worth $700 million in the last fiscal year. It ex- trade
ported goods worth $400 million in the same year.
The difference in the value of Romernia's imports and
exports is known as _____.

85. Pyoiunalek's, a restaurant chain, markets and endors- foreign franchising

es its businesses in other countries by offering buyers
the rights to launch and operate the restaurant in that
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country. It lends financial and marketing assistance to
the buyers. In this scenario, Pyoiunalek's is employing
the strategy of _____ to reach global markets

86. __________is the authority granted by a domestic firm Foreign licensing

to an overseas firm for the rights to produce and mar-
ket its product or to use its trademark/patent rights in
a defined geographical area

87. Which of the following statements is true of interna- It offers compa-

tional trade nies an invalu-
able source of new
ideas.

88. In the context of international trade restrictions, _____ quotas

are limitations on the amount of specific products
that may be imported from certain countries during a
given time period

89. In the context of international trade, which of the fol- As technology

lowing statements is true of comparative advantage changes, nations
may gain or lose
comparative ad-
vantage in various
industries.

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