Question 1

______ is the least costly method of achieving international sales.&#10;A) Foreign direct investment&#10;B) Exporting&#10;C) Strategic alliances&#10;D) Brownfield strategy

Accepted Answer

Exporting is the least costly method of achieving international sales as it involves selling products or services to foreign markets while keeping production within the domestic country. It eliminates the need for establishing production facilities or partnerships in foreign markets, making it a more cost-effective option.

Question 2

Granting a foreign entity the right to use a certain process for a fee is an example of ______.&#10;A) Foreign direct investment&#10;B) Exporting&#10;C) Licensing&#10;D) Franchising

Accepted Answer

Licensing involves granting a foreign entity the right to use a certain process, design or technology for a fee. This allows the licensor to generate revenue without having to invest extensively in foreign markets.

Question 3

Having domestic success before international expansion is especially important when ______.&#10;A) Exporting&#10;B) Franchising&#10;C) Licensing&#10;D) All of the above

Accepted Answer

Having domestic success before international expansion is important in all three options- exporting, franchising, and licensing. This ensures that the company has a solid foundation and proven business model before venturing into new markets with different cultures, regulations, and consumer preferences. It also helps establish brand recognition and credibility, which can be leveraged for international growth.

Question 4

Which of the following patterns of world trade is not accurate?&#10;A) World Trade has increased since 1948&#10;B) Trade is more prevalent among industrialized nations&#10;C) Less developed countries tend to import finished goods&#10;D) Less developed countries tend to import commodities

Accepted Answer

Less developed countries are more likely to export commodities and import finished goods, not the other way around. Commodities typically include raw materials and agricultural products, which are abundant in less developed countries.

Question 5

The infant industry argument was first popularized by ________.&#10;A) Milton Berle&#10;B) Thomas Jefferson&#10;C) Alexander Hamilton&#10;D) Justin Bieber

Accepted Answer

The infant industry argument was first popularized by Alexander Hamilton.

Question 6

Protectionism can be defined by all except _______.&#10;A) Increased subsidies for foreign firms&#10;B) Increased tariffs for foreign exporters&#10;C) Increased subsidies for domestic firms&#10;D) Quota limits for foreign exporters

Accepted Answer

Protectionism involves promoting domestic industries by implementing policies such as tariffs, quotas, and subsidies for domestic firms. Therefore, increased subsidies for foreign firms would not be an example of protectionism.

Question 7

Tariffs assessed according to a physical unit of measurement are known as _______.&#10;A) Ad valorem duties&#10;B) Quota units&#10;C) Compound tariffs&#10;D) Specific duties

Accepted Answer

Tariffs assessed according to a physical unit of measurement are known as specific duties. Ad valorem duties are assessed as a percentage of the value of the goods, quota units limit the quantity of goods that can be imported, and compound tariffs are a combination of specific and ad valorem duties.

Question 8

OPEC is an example of a(n) ______ of oil producing nations.&#10;A) cluster&#10;B) cartel&#10;C) compound&#10;D) consolidation

Accepted Answer

OPEC is a cartel, which is a group of producers that work together to control the supply and price of a product, in this case, oil.

Question 9

Examples of non-tariff barriers to merchandise trade are all except _________.&#10;A) Rigorous customs and product entry procedures&#10;B) Detailed safety inspections&#10;C) Lofty environmental standards&#10;D) Required percentages of foreign content material

Accepted Answer

Required percentages of foreign content materials are actually an example of a tariff barrier to merchandise trade, as they limit the amount of foreign goods that can be imported and increase the price of those that are allowed. The other three options - rigorous customs and product entry procedures, detailed safety inspections, and lofty environmental standards - are examples of non-tariff barriers as they do not directly restrict the amount of trade, but make it more difficult or costly for goods to cross borders.

Question 10

Securitization can involve all of the following except _______.&#10;A) Residential mortgages&#10;B) Student loans&#10;C) Covered bonds&#10;D) Taxi medallions

Accepted Answer

Securitization involves pooling various types of contractual debt such as residential mortgages, student loans, and taxi medallions, and selling their related cash flows to third-party investors as securities. Covered bonds, however, are not a form of securitization but rather debt securities backed by cash flows from mortgages or public sector loans. Unlike securitized assets, the assets backing covered bonds remain on the issuer's balance sheet.

Question 11

A pharmaceutical company is more likely to franchise than to license their product.

Accepted Answer

The answer of A pharmaceutical company is more likely to...

Question 12

Strategic alliances typically last forever.

Accepted Answer

The answer of Strategic alliances typically last forever....

Question 13

Brownfield strategies can be cheaper but riskier than greenfield strategies.

Accepted Answer

The answer of Brownfield strategies can be cheaper but riskier...

Question 14

Venezuela is a member of OPEC.

Accepted Answer

The answer of Venezuela is a member of OPEC....

Question 15

An embargo can be classified as a type of quota.

Accepted Answer

The answer of An embargo can be classified as a...

Deck 2: The Nature of International Business