MAN6608 Midterm Solution

MAN6608 Midterm  Solution

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QUESTION 1

1.            According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends?

                U.S. imports become less capital-intensive than U.S. exports.

                The pattern of international trade is affected by differences in factor endowments rather than differences in productivity.

                Over time, the United States switches from being an exporter of a product to an importer of the product.

                The wage rates in the United States decrease.

                Developing nations fail to upgrade their skill levels to compete with advanced countries.

0.5 points  

QUESTION 2

1.            What is the shift toward a more integrated and interdependent world economy called?

                International trade

                Foreign direct investment

                Globalization

                Moore's Law

                Containerization

0.5 points  

QUESTION 3

1.            Capricorn Creative Inc., a U.S.-based advertising firm, was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in its economy. As a result, the firm was able to build brand loyalty and gain experience in that country's business practices. In the language of business strategy, Capricorn Creative has typically benefited from:

                a first-mover advantage.

                forward integration.

                unrelated differentiation.

                lateral diversification.

                technology transfer.

0.5 points  

QUESTION 4

1.            Animax Limited got an order to sell 50,000 central processing units (CPUs) to Palladia, but the Palladian government stipulated that 15 percent of the component parts of those CPUs must be produced in Palladia. This stipulation by the Palladian government would be example of a(n):

                voluntary export restraint.

                quota rent.

                import quota.

                local content requirement.

                antidumping policy.

0.5 points  

QUESTION 5

1.            Standards Motor Products of Queens, New York, maintains a cadre of unskilled workers because:

                Overseas labor is too expensive

                Robotics and other machinery are more expensive than domestic labor

                The company is concerned about their intellectual property

                Quality in offshore production is significantly inferior

0.5 points  

QUESTION 6

1.            The lowering of trade and investment barriers:

                protects domestic industries from foreign competition.

                was not an agenda of the Uruguay Round.

                allows firms to base production at optimal locations outside their home country.

                creates an unfavorable environment for FDI.

                caused the Great depression of the 1930s.

0.5 points  

QUESTION 7

1.            Which of the following statements is true about most Western societies?

                In Western societies social groups, rather than individuals, are the basic building blocks of social organization.

                The value systems of many Western societies emphasize individual achievement.

                In Western societies, the social standing of individuals is merely a function of who they work for.

                The emphasis on individuals in Western societies has led to a low level of entrepreneurial activity.

                It is easier to build and manage teams within organizations in Western societies.

0.5 points  

QUESTION 8

1.            Maytag appliances achieve far better economic performance than firms like Whirlpool and Electrolux by concentrating on markets that are not so widely dispersed geographically

  True

  False

0.5 points  

QUESTION 9

1.            The total amount of the world’s capital formation generated from foreign direct investment is

                75%

                90%

                10%

                Less than 2%

0.5 points  

QUESTION 10

1.            There is a negative relationship between physical distance and trade but a positive one if the trading countries utilize the same currency

  True

  False

0.5 points  

QUESTION 11

1.            Which of the following statements is true about innovations and entrepreneurship?

                A command economy creates greater incentives for innovation and entrepreneurship than a market economy.

                If a country's economy is to sustain long-run economic growth, the business environment must restrict entrepreneurial activity.

                A high level of entrepreneurial activity leads to a low level of innovation.

                Innovations in production and business processes lead to an increase in the productivity of labor and capital.

                Strong legal protection of property rights creates an unfavorable environment for innovation and entrepreneurship.

0.5 points  

QUESTION 12

1.            The rise of Islamic fundamentalism is, in part, a response to the:

                denial of equal rights for women and other minorities.

                movement in traditional Islamic societies toward modernization.

                narrowing gap between the rich and the poor.

                increasing standard of living in Islamic societies.

                widening gap between the highly developed and the less developed nations.

0.5 points  

QUESTION 13

1.            By lowering production costs, subsidies help domestic producers to:

                gain export markets.

                meet import quotas.

                meet voluntary export restraints.

                meet the local content requirement.

                compete in the domestic market against local producers.

0.5 points  

QUESTION 14

1.            In “Making it in America,” output from American factories in the last decade has:

                fallen dramatically

                increased dramatically

                remained the same

                fallen slightly

0.5 points  

QUESTION 15

1.            Many commentators have blamed the problems that led to global financial crisis of 2008-2009, and the recession that followed on:

                a lack of free markets.

                a lack of regulation.

                the political ideologies followed in the Asian countries.

                a strong presence of command economies.

                a lack of privatization and liberalization.

0.5 points  

QUESTION 16

1.            In 2012, if the PPP per capita of China was $9,040 and the PPP per capita of the United States was $52,340, this means that the:

                GNI per capita was greater in China.

                percent of goods and services consumed in the United States was lower.

                standard of living in China was better.

                cost of living was lower in China.

                annual average GDP growth rate was lower in China.

0.5 points  

QUESTION 17

1.            How does privatization help stimulate gains in economic efficiency?

                It allows newly privatized firms to gain monopoly position in a particular industry.

                It provides incentives to new private owners to search for increases in productivity and to enter new markets.

                It encourages state control over price and production output.

                It raises barriers to direct investment by foreign enterprises.

                It results in reservation of heavy industry for state ownership and the increase of import tariffs.

0.5 points  

QUESTION 18

1.            Which of the following statements is true with regard to Geert Hofstede's cultural dimensions?

                In societies where collectivism was emphasized, the ties between individuals were loose.

                Low power distance cultures were found in countries that let inequalities grow over time into inequalities of power and wealth.

                Members of high uncertainty avoidance cultures had a strong need for rules and regulations.

                In masculine cultures, little differentiation was made between men and women in the same job.

                Members of low uncertainty avoidance cultures placed a premium on job security, career patterns, and retirement benefits.

0.5 points  

QUESTION 19

1.            In which countries are we likely to find free market economies?

                Countries where the good of the society has precedence over private profit

                Countries where individual goals are given primacy over collective goals

                Countries where state-owned enterprises have a monopoly in certain industries

                Countries that have adopted communism as their political system

                Countries where the government plans the goods and services produced

0.5 points  

QUESTION 20

1.            If Argonia exports vast quantities of cheap toys to Cadmia, selling them at below their costs of production, it would constitute:

                monopolism.

                dumping.

                offshoring.

                nearshoring.

                subsidizing.

0.5 points  

QUESTION 21

1.            Silver Tape Corporation has developed a new type of adhesive tape. Which of the following types of legal protections can grant the company exclusive rights for a defined period to the manufacture, use, or sale of the new adhesive tape?

                Warrant

                Patent

                Copyright

                Trademark

                Writ

0.5 points  

QUESTION 22

1.            Which of the following best exemplifies foreign direct investment (FDI)?

                Pure Pearls, a jewelry store in the United States, imports harvested pearls from Indonesia, Philippines, and Australia.

                Chivalry, a U.S.-based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market.

                Delicate Love, a reputable florist company in Holland, exports tulips and roses throughout the globe.

                Samantha started an Italian restaurant in her home country, the United States, after she took cooking lessons from a well-known chef in Italy.

                Yin and Yang Inc., a Chinese firm, supplies buttons and zippers to major denim brands in the United Kingdom.

0.5 points  

QUESTION 23

1.            Which of the following are unit cost reductions associated with a large scale of output?

                Comparative advantages

                Factor endowments

                Economies of scale

                Diminishing returns

                Absolute advantages

0.5 points  

QUESTION 24

1.            Which of the following best exemplifies ethnocentrism?

                Sarah believes that her opinions and interests are superior to that of her siblings.

                Nicole is highly tolerant toward different cultures and is also keen on learning different languages.

                Bryan's belief in the superiority of his culture has resulted in conflicts with his colleagues from different countries.

                Emilio is in an ethical dilemma as he has been given the responsibility of deciding whether or not to hire his under-qualified cousin.

                Galaxy Inc. has been accused of using legal but unethical ways to gain access into the markets of less developed countries.

0.5 points  

QUESTION 25

1.            The recent trend to outsource information technology jobs to countries such as India indicates that:

                the availability of unskilled labor has increased in these countries.

                these countries have benefited by moving toward communism.

                a good education system is a determinant of national competitive advantage.

                the availability of a pool of unskilled labor has been reduced in Western countries.

                these countries are taking advantage of their latitudinal location.

0.5 points  

QUESTION 26

1.            The sale of state-owned enterprises to independent, nonpublic investors is referred to as:

                privatization.

                nationalization.

                collectivism.

                communalism.

                public action.

0.5 points  

QUESTION 27

1.            Which of the following suggests that trade is a positive-sum game in which all participating countries fetch economic gains?

                The Heckscher-Ohlin theory

                Mercantilism

                The theory of comparative advantage

                Leontief's paradox

                The Samuelson critique

0.5 points  

QUESTION 28

1.            In what type of economy are certain sectors of the economy left to private ownership and free market mechanisms, while in other sectors there is significant state ownership and government planning?

                Command

                Pure market

                Mixed

                Centrally planned

                Laissez-faire

0.5 points  

QUESTION 29

1.            According to Vernon, which of the following influences the movement of the locus of global production from advanced countries to developing countries?

                Cost considerations

                Factor endowments

                Domestic competition

                Supporting industries

                Firm structure

0.5 points  

QUESTION 30

1.            Even workers with advanced manufacturing skills do not earn higher wages than less skilled workers and have little opportunity in the manufacturing sector.

  True

  False

0.5 points  

QUESTION 31

1.            Which of the following identifies the motivation for much of the foreign direct investment by non-U.S. firms?

                The desire to disperse production activities to optimal locations

                The need to suppress emerging economies such as China, India, and Brazil

                The demand for skilled workers in foreign nations

                The lack of adequate environmental regulations

                The establishment of multinational treaties

0.5 points  

QUESTION 32

1.            In the United States, the Foreign Corrupt Practices Act was passed during the 1970s following revelations that:

                U.S. companies had bribed government officials in foreign countries in an attempt to win lucrative contracts.

                U.S. companies were involved in bribing U.S. government officials in cases related to major corporate and accounting scandals.

                U.S. government bureaucrats demanded bribes from U.S. companies in return for a permit to operate in a foreign country.

                several companies were selling their products at lower prices in foreign countries than in the United States.

                successful business owners in the United States often had to pay "protection money" to the Mafia or face violent retribution.

0.5 points  

QUESTION 33

1.            Which of the following is a major reason why many economists remain critical of the infant industry argument?

                It makes the domestic industry inefficient.

                It does not provide guaranteed employment for the citizens.

                It affects the standards of living and per capita income of the people.

                It promotes foreign direct investment.

                It leads to reduced prices in domestic markets.

0.5 points  

QUESTION 34

1.            In “Big Lessons from Small Disruptions” the author argues that companies can reduce vulnerabilities to disruptions by:

                Increasing resilience and security

                Exiting from emerging markets

                Automating the entire production chain

                None of the above

0.5 points  

QUESTION 35

1.            Which products are not so sensitive cultural distance

                Cereals

                Tobacco products

                Metalworking machinery

                Meat and meat preparations

0.5 points  

QUESTION 36

1.            Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the:

                rich industrialized nations of the world like Great Britain and Germany.

                centrally planned economies of the communist world.

                United States.

                developing nations of the world such as China, India, and Brazil.

                countries that are currently not members of the World Trade Organization.

0.5 points  

QUESTION 37

1.            Increasing globalization by way of a flat world has diminished the importance of national sovereignty, as people across the globe are less protectionist today than in the past.

  True

  False

0.5 points  

QUESTION 38

1.            Which of the following groups benefits the most from the imposition of tariffs?

                Domestic producers

                Consumers

                Exporters and importers

                Foreign producers

                International bodies such as WTO

0.5 points  

QUESTION 39

1.            Automobile companies promote different car models in different countries depending on a range of factors such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This most likely demonstrates that:

                significant differences still exist among national markets.

                cultural diversity has been replaced by global uniformity.

                the global market is less complex than national markets.

                only multinational giants can benefit from the globalization of markets.

                the social norms in a country do not affect purchase decisions of consumers.

0.5 points  

QUESTION 40

1.            In “Distance Still Matters,” Pankaj Ghemawat cites four dimensions of distance that can have impacts on business

                Cultural, administrative, geographic, economic

                Cultural, historical, anthropological, financial

                Infrastructure, economic, linguistic, administrative

                None of the above

0.5 points  

QUESTION 41

1.            When Shop Smart opened its first super market in China it was unable to generate any sales. After conducting a research, it was understood that the local sales personnel found it difficult to communicate with the American store managers. In addition, Chinese consumers found it difficult to shop in the American way. Shop Smart's failure in China can be attributed to the lack of:

                cross-cultural literacy.

                class consciousness.

                a first-mover advantage.

                Confucian dynamism.

                ethnocentrism.

0.5 points  

QUESTION 42

1.            Time zones, languages, and the need for proximity to clients’ local operations prompted India’s Tata Consultancy Services to serve the Latin American region from Uruguay and not India, challenging the notion that the world is flat.

  True

  False

0.5 points  

QUESTION 43

1.            Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors?

                Monopolistic practices

                Comparative advantages

                Absolute advantages

                First-mover advantages

                Mercantilism

0.5 points  

QUESTION 44

1.            In today’s world more than 90% of all phone calls, Web traffic and investment is

                International

                Regional

                Local

                Concentrated in emerging markets

0.5 points  

QUESTION 45

1.            Subsidized job training programs are, in theory, a viable solution to skills upgrading of the American workforce.

  True

  False

0.5 points  

QUESTION 46

1.            The act that allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution is known as the:

                Frederick-Peterson Act.

                D'Amato-Perkins Act.

                Perkins-Dole Act.

                Helms-Burton Act.

                Godfrey-Milliken Act.

0.5 points  

QUESTION 47

1.            Patents, copyrights, and trademarks establish ownership rights over what type of property?

                Intellectual

                Real

                Tangible

                Non-performing

                Stolen

0.5 points  

QUESTION 48

1.            Which of the following measures the total annual income received by residents of a country and is regarded as a yardstick for the economic activity of a country?

                Income elasticity of demand

                Cash reserve ratio

                Net cash flow ratio

                Gross national income

                Income equity ratio

0.5 points  

QUESTION 49

1.            Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?

                Mercantilism

                The theory of absolute advantage

                The Heckscher-Ohlin theory

                The theory of comparative advantage

                Samuelson's critique

0.5 points  

QUESTION 50

1.            The minimum that a firm has to do to engage in international business is to:

                export or import products from other countries.

                invest directly in operations in another country.

                establish joint ventures or strategic alliances with companies in other countries.

                export low-wage manufacturing jobs to companies in other countries.

                develop franchises and subsidiaries in other countries.