Question 1

Which of the following government policies creates an environment of restrictive standards intended to make it difficult for foreign firms to successfully sell their products?

Accepted Answer

Nontariff barriers are government policies that create an environment of restrictive standards intended to make it difficult for foreign firms to successfully sell their products. Examples of nontariff barriers include quotas, embargoes, product standards, and other regulations.

Question 2

Climate and terrain in several South American countries are conducive to growing coffee efficiently.While other countries can grow coffee,they are not as productive or efficient.This fact would lead you to believe that the South American countries have a(n) _________________ advantage in the production of coffee.

Accepted Answer

The fact that South American countries have a more conducive climate and terrain for growing coffee means they have a comparative advantage in coffee production compared to other countries. A comparative advantage means that a country can produce a good or service at a lower opportunity cost than another country. In this case, South American countries can produce coffee more efficiently than others, giving them a comparative advantage.

Question 3

ExxonMobil Corporation refines and markets its petroleum products in different nations.In addition,Exxon's stockholders and managers come from different nations.ExxonMobil is an example of a true:

Accepted Answer

ExxonMobil Corporation operates in multiple countries and has a diverse group of stockholders and managers, which makes it a multinational corporation.

Question 4

All of the following are objectives of the North American Free Trade Agreement (NAFTA)except:

Accepted Answer

The creation of a single currency to compete with the euro was not an objective of NAFTA. The agreement only aimed to eliminate trade barriers and increase investment opportunities between member nations, while also providing protection for intellectual property rights.

Question 5

What is the major disadvantage of a subsidiary?

Accepted Answer

Establishing a subsidiary requires significant investment of funds and technology in a foreign country, which can be a major disadvantage due to the risks and costs involved.

Question 6

The purpose of the General Agreement on Tariffs and Trade (GATT)is to:

Accepted Answer

The purpose of the General Agreement on Tariffs and Trade (GATT) is to facilitate global trade by reducing barriers such as tariffs and quotas between member countries. The agreement aimed to promote economic growth and development by promoting free and fair trade practices.

Question 7

tariffs are designed to raise money for the government.

Accepted Answer

Tariffs are taxes levied on imported goods, and they are specifically designed to generate revenue for the government. They are not intended to regulate trade practices (regulatory), determine a fair market price (price), or increase business profits (profit).

Question 8

What two priority markets are of particular interest to Canada due to their size and economic transformation?

Accepted Answer

China and India are both large and rapidly-growing economies, making them priority markets for Canada.

Question 9

Who has led a global effort to fight corruption and bribery in foreign markets?

Accepted Answer

The OECD, or the Organization for Economic Cooperation and Development, has led a global effort to fight corruption and bribery in foreign markets. The organization has developed an Anti-Bribery Convention, which has been ratified by over 40 countries, to promote and enforce international standards for combating corruption in business transactions.

Question 10

For a firm to be considered a multinational corporation,all the following conditions must be true except that:

Accepted Answer

Not all transactions of a multinational corporation must be financed by the International Monetary Fund. The other conditions, such as having manufacturing and marketing facilities in different countries and multinational stock ownership are true for a firm to be considered a multinational corporation.

Question 11

A________is a partnership in which companies from two different countries join to undertake a major project.

Accepted Answer

A joint venture is a type of business where two companies from different countries come together to work on a specific project or business venture. They may share the risks, costs, and profits of the project. It allows for companies to combine their expertise, resources, and market access to achieve a common goal.

Question 12

A_______ tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.

Accepted Answer

A protective tariff is intended to protect domestic industries from foreign competition by increasing the price of imported goods, making domestic products more attractive to consumers. By contrast, a revenue tariff is simply a tax that generates revenue for the government and has no specific aim of protecting domestic industries. A progressive tariff refers to a system in which the tariff rate increases as the value of the imported goods increases, while a restrictive tariff is designed to reduce the overall level of imports.

Question 13

A major concern voiced by Canadian critics of the North American Free Trade Agreement (NAFTA)is that it would result in:

Accepted Answer

Critics of NAFTA in Canada were concerned that the agreement would result in job losses in the Canadian economy, as companies could move their operations to Mexico where labor costs were lower. While NAFTA did lead to increased trade between the three countries and created jobs in some sectors, others experienced job losses, particularly in manufacturing.

Question 14

In a licensing agreement,who pays for marketing the product?

Accepted Answer

It is typically the responsibility of the licensee to market the product, as they are the ones who have the right to use and sell the product under the licensing agreement. The licensor may provide some support or guidance in marketing, but ultimately it is the licensee's responsibility.

Question 15

The three countries participating in NAFTA are:

Accepted Answer

NAFTA stands for North American Free Trade Agreement and it includes Canada, Mexico, and the United States. Therefore, the correct answer is A.

Question 16

The outlook for growth in global trade in the future will likely focus on:

Accepted Answer

China has emerged as a major player in global trade and has been steadily increasing its trade partnerships with countries worldwide. Its Belt and Road Initiative aims to expand trade and investment along the ancient Silk Road routes, and the country's leadership in 5G technology and e-commerce is also driving growth in global trade.

Question 17

An unfavourable balance of trade occurs when the value of:

Accepted Answer

An unfavorable balance of trade occurs when the value of imports exceeds the value of exports. This means that the country is importing more goods and services than it is exporting, resulting in a net outflow of currency. This can have negative effects on the economy, such as a decline in the value of the country's currency and decreased economic growth.

Question 18

Patrick's Products has a manufacturing plant near Calgary.The plant specializes in compact washers and dryers for countries in which consumers have less living space.Patrick's Products participates in the global market through:

Accepted Answer

Patrick's Products participates in the global market by exporting their compact washers and dryers to countries in which consumers have less living space. This is the best choice because it aligns with the company's specialization and target market.

Question 19

The country where a parent firm is located is known as what?

Accepted Answer

The country where a parent firm is located is known as the home country.

Question 20

Country A is an extremely efficient producer of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:

Accepted Answer

According to the theory of comparative advantage, a country should specialize in producing the good or service in which it has a lower opportunity cost of production and trade with other countries to obtain goods and services it cannot efficiently produce. In this case, Country A is more efficient in producing tin and less efficient in producing corn. Therefore, it should concentrate its production on tin and import corn from a more efficient producer. This will increase the overall production and consumption in the global market and benefit both countries.

Quiz 3: Competing in Global Markets