Question 1

Countries with which of the following are more likely to attain high and sustained economic growth rates and are thus a more attractive location for international business?

Accepted Answer

Countries with democratic regimes tend to have stable political environments that are conducive to economic growth and protect property rights. These countries are also more likely to have open and transparent markets, which are attractive to international businesses.

Question 2

In the context of cost,which of the following can be considered as the most attractive market or investment site?

Accepted Answer

A country with a well-developed body of business contract law provides reliable mechanisms for resolving disputes and enforcing contracts, which lowers transaction costs and reduces the risk of investment. This creates a more attractive market or investment site.

Question 3

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

Accepted Answer

Many experts agree that a lack of adequate regulation played a significant role in the global financial crisis of 2008-2009. Financial institutions took on excessive risk, engaged in reckless lending practices, and made speculative investments with little oversight or accountability. This allowed problems to fester and grow until they ultimately exploded, causing widespread harm to the global economy. While other factors may have also contributed to the crisis, the need for greater regulation is widely recognized.

Question 4

Which of the following statements is true about the global changes in political and economic systems?

Accepted Answer

Many undeveloped and impoverished national markets in eastern Europe, Latin America, Africa, and Asia have great potential for international business. This is due to factors such as growing populations, increasing urbanization, and the rise of a middle class in these regions. The other options are not accurate: A is false as the West won the Cold War and communist ideology is not widespread; B is debatable as the causes of the financial crisis are complex and varied; C cannot be guaranteed; and D is false as the world has become more multipolar with the rise of emerging powers like China and India.

Question 5

The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy usually results in

Accepted Answer

The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy undermine the security of ownership, which decreases the incentive to engage in economic activity. Both individuals and businesses are unlikely to invest in new projects, expand operations or take risks in this situation where there is a high risk of insecurity, uncertainty, and arbitrary expropriation.

Question 6

In the Republic of Lantharia,the state-owned telephone company enjoys a monopoly.The government of Lantharia Republic wants to maximize the operating efficiency of this company by privatizing it.Which of the following is most likely to help the government succeed in this endeavor?

Accepted Answer

Splitting the company into independent units to compete with each other is most likely to help the government succeed in privatizing the state-owned telephone company as it will create competition and increase efficiency. All the other options are likely to hinder the privatization process, as they either impose taxes or barriers or limit competition, which can discourage investors and result in lower efficiency.

Question 7

The cost of doing business is most likely to be the lowest in

Accepted Answer

The answer of The cost of doing business is most...

Question 8

Star Volans Inc.is planning on expanding its business globally.In terms of the costs involved in conducting business in a country,it will be most economical for the company if it chooses a country

Accepted Answer

Choosing a country where politicians are held accountable by the electorate will ensure a stable government and a favorable business environment. This will prevent unnecessary disruptions in business operations and ensure the protection of the company's investments. Additionally, a stable government will provide a favorable investment climate, which will lead to economic growth and profitability for the company.

Question 9

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

Accepted Answer

Capricorn Creative Inc. was the first company in the advertising industry to identify the growth potential of Brazil and make huge investments in its economy. This gave them a first-mover advantage, which is a strategy where a company is the first to enter a market, giving them a competitive advantage over later entrants.

Question 10

Which of the following is an implication of the global changes in political and economic systems for international business?

Accepted Answer

The global changes in political and economic systems have led to a decrease in the ideological conflict between collectivism and individualism, as many countries have adopted a mixed economy model that integrates elements of both ideologies. This has implications for international business, as companies need to understand and adapt to the economic and political systems of the countries they operate in.

Question 11

Which of the following best exemplifies a first-mover advantage?

Accepted Answer

Venus Inc. being the first to invest in the telecom industry and gain 50% market share exemplifies a first-mover advantage.

Question 12

When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise,the business enterprise is said to be facing which of the following type of risk?

Accepted Answer

Political risk refers to the risk of business operations being adversely affected due to political changes and instability in a country. Social unrest and disorder are political factors that may lead to changes in policies, regulations, and government operations that can affect business operations and profitability. Therefore, the risk faced by the business enterprise in this scenario is political risk.

Question 13

In economic terms,the long-run monetary benefits of doing business in a country are most likely to be a function of the

Accepted Answer

The present wealth (purchasing power) of consumers in a country is likely to have the greatest impact on the long-run monetary benefits for a business. This is because businesses need consumers to purchase their goods or services in order to generate revenue and profit. Countries with higher levels of consumer purchasing power are likely to provide more viable markets for businesses to sell their products or services, which can lead to greater long-term monetary benefits.

Question 14

The United Nation of Amberia,a Western European country,fought on the winning side of the Cold War.Which of the following was most likely being propagated by the country by participating in the Cold War?

Accepted Answer

The United Nation of Amberia's participation in the Cold War indicates a commitment to free markets and capitalism, which were central to the ideology of the Western powers during the Cold War. The other options listed (strong business regulations, communist ideologies, command economies, and totalitarian dictatorships) are associated with the opposing Soviet bloc.

Question 15

Which of the following statements is most likely to be true about the economic prospects of a country?

Accepted Answer

The economic system and property rights regime have a significant impact on the economic prospects of a country. A country with a sound economic system and strong property rights regime will provide a suitable environment for businesses to flourish, which will ultimately result in economic growth.

Question 16

When Galaxy Ventures,a real estate company,entered the low cost housing business,the market was already saturated with other players.Thus,the company was forced to exit the market due to lack of customer loyalty and substantial dividends.Which of the following is a term used to described the situation faced by the company?

Accepted Answer

The situation faced by Galaxy Ventures is described as late-mover disadvantages. This refers to the difficulty faced by companies entering an already saturated market where other players have established customer loyalty and substantial dividends. As a late-mover, Galaxy Ventures faced greater challenges in gaining a foothold in the market and competing effectively.

Question 17

Which of the following of the Cold War era has vanished?

Accepted Answer

The bipolar world, which refers to the division of the world into two superpowers - the United States and the Soviet Union, has vanished with the end of the Cold War. The world is no longer defined by two opposing blocs and their associated ideologies.

Question 18

Although China and India are very large markets when measured by number of consumers,they are relatively small markets when measured in economic terms due to their

Accepted Answer

China and India have large populations, but their average income levels are lower compared to developed countries, leading to limited purchasing power on a per capita basis.

Question 19

Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption,because of

Accepted Answer

The shift toward a market-based economic system in both China and India has encouraged entrepreneurship and allowed for increased economic activity despite weak property rights and corruption. The adoption of market-oriented policies such as privatization, foreign investment, and liberalization of trade has led to increased competition and growth in both countries.

Question 20

Which of the following factors in a country is most likely to cause political risk for an international business?

Accepted Answer

Presence of more than one ethnic nationality can often cause political instability and unrest, leading to increased political risk for international businesses operating in the country. Infrequent changes in government and government policy (B) may actually reduce political risk, while low inflation rate (C), low level of government debt (D), and high living standards (E) are generally seen as positive factors for businesses operating in a country.

Quiz 3: National Differences in Economic Development