Question 1

Small countries might produce more of a particular good than their domestic citizens can consume

Accepted Answer

When there are increasing returns to scale, producing more of a good can result in lower average costs, which makes export of the surplus goods profitable even if domestic demand is limited. Therefore, small countries might produce more of a particular good than their domestic citizens can consume if there are increasing returns to scale and export of the surplus is possible.

Question 2

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€)?

Accepted Answer

A decrease in investment opportunities in the eurozone would likely lead to a decrease in demand for euros, causing the euro to depreciate relative to the yen, thus increasing the exchange rate of yen to euros (¥/€).

Question 3

If a currency such as the US$ is traded in a competitive market, a(n)________ in demand for the US$ ________ the price of the US$ in terms of another currency such as the Japanese Yen (¥).

Accepted Answer

According to the law of demand, an increase in demand leads to a higher price. Therefore, an increase in demand for the US$ will lead to a higher price in terms of another currency such as the Japanese Yen (¥).

Question 4

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€)?

Accepted Answer

When demand for European goods in Japan decreases, there will be a lower demand for euros to pay for those goods, causing the value of the euro to decrease relative to the yen. Therefore, the exchange rate of yen to euros (¥/€) will increase.

Question 5

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then the U.S.

Accepted Answer

The U.S. has a comparative advantage in the production of pizza because it can produce it at a lower opportunity cost compared to Germany. Specifically, the U.S. can produce one pizza for only 5/25 = 0.2 barrels of beer, while Germany needs to give up 7/21 = 0.33 barrels of beer to produce one pizza. Therefore, the U.S. should specialize in pizza production and trade with Germany, which should specialize in beer production. This would allow both countries to take advantage of their comparative advantages and increase overall global efficiency. There is no evidence to suggest that the U.S. has an absolute advantage in beer production, nor does it have a comparative advantage in both beer and pizza production.

Question 6

According to the mini-case on the Barbie Doll, Mattel is successful because

Accepted Answer

The mini-case mentions how international trade allows Mattel to produce a wide variety of doll types at many price points, indicating that this is a key factor in the company's success. The other choices (A, B, and D) are either not mentioned in the mini-case or are not supported as significant reasons for Mattel's success.

Question 7

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then

Accepted Answer

The U.S. has a comparative advantage in producing pizza due to its lower cost and Germany has a comparative advantage in producing beer due to its lower cost. Therefore, it is more efficient for the U.S. to specialize in producing pizza and trade with Germany for beer. This leads to mutual benefits for both countries through international trade.

Question 8

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€)?

Accepted Answer

An increase in investment opportunities in the eurozone would likely lead to more capital flowing from Japan to the eurozone, increasing the demand for euros and decreasing the exchange rate of Yen to euros (¥/€).

Question 9

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses). If the exchange rate is 1.50 $/€ then

Accepted Answer

To determine which country has a comparative advantage in the production of a good, we must look at their respective opportunity costs. Opportunity cost is the value of the next best alternative foregone when a choice is made.

In this case, the U.S. can produce one barrel of beer for the opportunity cost of 5 pizzas ($37.50/$7.50), while Germany can produce one barrel of beer for the opportunity cost of 3 pizzas (€15/€5). Therefore, Germany has a lower opportunity cost for producing beer and thus has a comparative advantage in beer production.

Similarly, the U.S. can produce one pizza for the opportunity cost of 0.2 barrels of beer ($7.50/$37.50), while Germany can produce one pizza for the opportunity cost of 3 barrels of beer (€15/€5). Therefore, the U.S. has a lower opportunity cost for producing pizza and thus has a comparative advantage in pizza production.

Overall, the U.S. has a comparative advantage in pizza production while Germany has a comparative advantage in beer production.

Question 10

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then Germany has

Accepted Answer

Germany has a lower opportunity cost of producing beer compared to pizza, as it can produce beer at a lower cost compared to the U.S. On the other hand, the U.S. has a lower opportunity cost of producing pizza compared to beer, as it can produce pizza at a lower cost compared to Germany. Therefore, Germany has a comparative advantage in the production of beer.

Question 11

The ability to produce a good at a lower opportunity cost than someone else is called

Accepted Answer

The ability to produce a good at a lower opportunity cost than someone else is called comparative advantage. This means that a country or an individual can produce a good or service at a lower cost than its competitors, which makes it more efficient and competitive in the global market. This concept is fundamental in international trade, as countries can benefit from trading with each other by specializing in the production of goods they have a comparative advantage in.

Question 12

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

Accepted Answer

The Vietnamese factory has a lower opportunity cost for producing engines, while the Australian factory has a lower opportunity cost for producing transmissions, giving it a comparative advantage in transmissions.

Question 13

According to the principal of comparative advantage a country

Accepted Answer

The principle of comparative advantage states that a country should specialize in producing goods that it can produce at the lowest opportunity cost (relative cost), compared to other countries, and import goods that it would otherwise produce at a higher opportunity cost. Therefore, a country will export goods it can produce at the lowest relative cost (option C). The absolute cost of production is irrelevant to the principle of comparative advantage. Option A is incorrect because a country can have an absolute advantage in producing a good but have a higher opportunity cost of producing that good. Option B is incorrect because it does not mention the concept of opportunity cost. Option D is also incorrect because a country may import goods that it can produce for itself if the opportunity cost of producing it domestically is higher than the cost of importing it.

Question 14

An exchange rate is

Accepted Answer

An exchange rate is the price of one currency in terms of another. It shows how much one currency is worth in relation to another currency. It is not related to the monetary value of goods and services exchanged for imports or the amount of gold a currency will buy.

Question 15

If the Mexican peso (MXN)to Brazilian real (BRL)exchange rate goes from 5.9 MXN/BRL to 5.2 MXN/BRL

Accepted Answer

The answer of If the Mexican peso (MXN)to Brazilian real...

Question 16

If the Mexican peso (MXN)to Brazilian real (BRL)exchange rate goes from 5.9 MXN/BRL to 7.2 MXN/BRL

Accepted Answer

When the exchange rate for MXN/BRL increases, it means that the Mexican peso has weakened in relation to the Brazilian real. This makes Mexican goods cheaper for Brazilian buyers, which would increase their demand for Mexican goods. Therefore, the correct answer is B.

Question 17

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

Accepted Answer

The Vietnamese factory has a lower opportunity cost of producing engines, as it can produce 1.5 engines for each transmission, while the Australian factory can only produce 1.33 engines for each transmission. Therefore, the Vietnamese factory has a comparative advantage in the production of engines.

Question 18

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

Accepted Answer

The Vietnamese factory can produce more of both engines and transmissions per day than the Australian factory, indicating an absolute advantage in producing both items.

Question 19

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€)?

Accepted Answer

An increase in investment opportunities in the eurozone would lead to increased demand for euros, pushing up the exchange rate of Yen to Euros. Therefore, the correct option to decrease the exchange rate of Yen to Euros would be a decrease in investment opportunities in the eurozone.

Question 20

If there are increasing returns to scale, then it makes sense to consolidate operations into one production facility

Accepted Answer

Increasing returns to scale refer to the situation where the cost per unit of production decreases as the level of output increases. When there are increasing returns to scale, consolidating production into one facility can lead to lower production costs and increased efficiency. This is particularly advantageous if the excess production can be exported, as this allows the firm to take advantage of economies of scale and achieve higher profits. Therefore, option A is the best choice. The other options are not relevant to the concept of increasing returns to scale.

Quiz 17: Global Business

Small countries might produce more of a particular good than their domestic citizens can consume

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€) ?

If a currency such as the US$ is traded in a competitive market, a(n) in demand for the US$ the price of the US$ in terms of another currency such as the Japanese Yen (¥) .

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€) ?

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then the U.S.

According to the mini-case on the Barbie Doll, Mattel is successful because

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€) ?

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses) . If the exchange rate is 1.50 $/€ then

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then Germany has

The ability to produce a good at a lower opportunity cost than someone else is called

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

According to the principal of comparative advantage a country

An exchange rate is

If the Mexican peso (MXN) to Brazilian real (BRL) exchange rate goes from 5.9 MXN/BRL to 5.2 MXN/BRL

If the Mexican peso (MXN) to Brazilian real (BRL) exchange rate goes from 5.9 MXN/BRL to 7.2 MXN/BRL

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€) ?

If there are increasing returns to scale, then it makes sense to consolidate operations into one production facility

Quiz 17: Global Business

Small countries might produce more of a particular good than their domestic citizens can consume

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€) ?

If a currency such as the US$ is traded in a competitive market, a(n) ________ in demand for the US$ ________ the price of the US$ in terms of another currency such as the Japanese Yen (¥) .

Which of the following is likely to increase the exchange rate of Yen to euros (¥/€) ?

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then the U.S.

According to the mini-case on the Barbie Doll, Mattel is successful because

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€) ?

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses) . If the exchange rate is 1.50 $/€ then

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then Germany has

The ability to produce a good at a lower opportunity cost than someone else is called

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

According to the principal of comparative advantage a country

An exchange rate is

If the Mexican peso (MXN) to Brazilian real (BRL) exchange rate goes from 5.9 MXN/BRL to 5.2 MXN/BRL

If the Mexican peso (MXN) to Brazilian real (BRL) exchange rate goes from 5.9 MXN/BRL to 7.2 MXN/BRL

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

Which of the following is likely to decrease the exchange rate of Yen to euros (¥/€) ?

If there are increasing returns to scale, then it makes sense to consolidate operations into one production facility

If a currency such as the US$ is traded in a competitive market, a(n) in demand for the US$ the price of the US$ in terms of another currency such as the Japanese Yen (¥) .