Question 1

Acquisition of an existing solar cell production plant would be considered

Accepted Answer

A) a greenfield investment. 
B) foreign direct investment. 
C) anti-competitive under antitrust law. 
D) Both A and B. 
A) a greenfield investment. 
B) foreign direct investment. 
C) anti-competitive under antitrust law. 
D) Both A and B.

Question 2

The manager of a U.S. office building hires a local company owned by a recent Canadian immigrant to handle landscape maintenance. This is a form of

Accepted Answer

A) domestic outsourcing. 
B) vertical integration. 
C) international outsourcing. 
D) insourcing. 
A) domestic outsourcing. 
B) vertical integration. 
C) international outsourcing. 
D) insourcing.

Question 3

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are transaction costs of US$50, and the exchange rate is 20 rand/US$, then

Accepted Answer

A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. 
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. 
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. 
D) there is no arbitrage opportunity. 
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. 
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. 
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. 
D) there is no arbitrage opportunity.

Question 4

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

A) The Vietnamese factory has an absolute advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies. 
A) The Vietnamese factory has an absolute advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.

Question 5

Your U.S.-based company is selling parts to a company in Chile and the company will pay you 9.8 million pesos in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

Accepted Answer

A) you earn additional profit. 
B) the Chilean company will end up paying more for the goods. 
C) the Chilean company will end up paying less for the goods. 
D) you earn less profit. 
A) you earn additional profit. 
B) the Chilean company will end up paying more for the goods. 
C) the Chilean company will end up paying less for the goods. 
D) you earn less profit.

Question 6

A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%. If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will

Accepted Answer

A) sell it to the U.S. parent at a transfer price equal to marginal cost, which will then sell it to the Irish subsidiary at monopoly level pricing. 
B) set the transfer price to the Irish subsidiary at the monopoly level. 
C) set the transfer price to the Irish subsidiary at marginal cost. 
D) Unable to determine with the information given. 
A) sell it to the U.S. parent at a transfer price equal to marginal cost, which will then sell it to the Irish subsidiary at monopoly level pricing. 
B) set the transfer price to the Irish subsidiary at the monopoly level. 
C) set the transfer price to the Irish subsidiary at marginal cost. 
D) Unable to determine with the information given.

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 Germany has

Accepted Answer

A) a comparative advantage in the production of beer. 
B) an absolute advantage in the production of beer. 
C) a comparative advantage in the production of pizza. 
D) a comparative advantage in the production of beer and pizza. 
A) a comparative advantage in the production of beer. 
B) an absolute advantage in the production of beer. 
C) a comparative advantage in the production of pizza. 
D) a comparative advantage in the production of beer and pizza.

Question 8

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

Accepted Answer

A) b + c + d + e. 
B) a. 
C) i. 
D) a + c + d + e. 
A) b + c + d + e. 
B) a. 
C) i. 
D) a + c + d + e.

Question 9

The price used to sell goods or services between subsidiaries in a company is

Accepted Answer

A) the tax avoidance price. 
B) set at the marginal cost of the producing subsidiary. 
C) determined by the minimum of the average cost curve. 
D) a transfer price. 
A) the tax avoidance price. 
B) set at the marginal cost of the producing subsidiary. 
C) determined by the minimum of the average cost curve. 
D) a transfer price.

Question 10

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. If imported rice is banned, the loss in social welfare is

Accepted Answer

A) a + b + c + d + e. 
B) a. 
C) c + e. 
D) i. 
A) a + b + c + d + e. 
B) a. 
C) c + e. 
D) i.

Question 11

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

Accepted Answer

A) production associated loss and inefficiency loss. 
B) productive consumption loss and protection loss. 
C) consumption distortion loss and production distortion loss. 
D) consumer misperception loss and taxation loss. 
A) production associated loss and inefficiency loss. 
B) productive consumption loss and protection loss. 
C) consumption distortion loss and production distortion loss. 
D) consumer misperception loss and taxation loss.

Question 12

International price discrimination for a good is possible if

Accepted Answer

A) goods are sold through the gray market. 
B) the price difference between two countries is greater than the transaction costs in arbitrage. 
C) the price difference between two countries is less than the transaction costs in arbitrage. 
D) None of the above. 
A) goods are sold through the gray market. 
B) the price difference between two countries is greater than the transaction costs in arbitrage. 
C) the price difference between two countries is less than the transaction costs in arbitrage. 
D) None of the above.

Question 13

One of the major effects of trade liberalization has been

Accepted Answer

A) the liberal use of tariffs and quotas. 
B) an increase in the use of beggar-thy-neighbor trade policies. 
C) the globalization of supply chains. 
D) an increase in the world price for most goods. 
A) the liberal use of tariffs and quotas. 
B) an increase in the use of beggar-thy-neighbor trade policies. 
C) the globalization of supply chains. 
D) an increase in the world price for most goods.

Question 14

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. Suppose a free market exists. An import quota of 30 units would

Accepted Answer

A) cause consumer surplus to fall by "e." 
B) cause social welfare to fall by $30. 
C) increase producer surplus by "d." 
D) have no effect. 
A) cause consumer surplus to fall by "e." 
B) cause social welfare to fall by $30. 
C) increase producer surplus by "d." 
D) have no effect.

Question 15

When deciding where to produce, a key decision criterion for a multinational enterprise

Accepted Answer

A) is the nationality of its founders. 
B) hinges on the ownership of its various subsidiaries. 
C) is the tax laws of the various countries is it considering. 
D) is the location of its headquarters. 
A) is the nationality of its founders. 
B) hinges on the ownership of its various subsidiaries. 
C) is the tax laws of the various countries is it considering. 
D) is the location of its headquarters.

Question 16

Your U.S.-based company is selling parts to a company in Chile and the company will pay you US$10,000 in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

Accepted Answer

A) you earn additional profit. 
B) the Chilean company will end up paying more for the goods. 
C) the Chilean company will end up paying less for the goods. 
D) you earn less profit. 
A) you earn additional profit. 
B) the Chilean company will end up paying more for the goods. 
C) the Chilean company will end up paying less for the goods. 
D) you earn less profit.

Question 17

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Accepted Answer

A) increases consumer surplus. 
B) increases total welfare. 
C) increases the deadweight loss. 
D) None of the above. 
A) increases consumer surplus. 
B) increases total welfare. 
C) increases the deadweight loss. 
D) None of the above.

Question 18

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

Accepted Answer

A) A decrease in investment opportunities in the U.S. 
B) An increase in investment opportunities in the Japan 
C) A decrease in demand for European goods in Japan 
D) An increase in investment opportunities in the eurozone 
A) A decrease in investment opportunities in the U.S. 
B) An increase in investment opportunities in the Japan 
C) A decrease in demand for European goods in Japan 
D) An increase in investment opportunities in the eurozone

Question 19

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

A) The Australian factory has an comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of engines. 
D) The Australian factory has a comparative advantage in the production of engines. 
A) The Australian factory has an comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of engines. 
D) The Australian factory has a comparative advantage in the production of engines.

Question 20

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

A) The Vietnamese factory has a comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) The Australian factory has a comparative advantage in the production of transmissions. 
A) The Vietnamese factory has a comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) The Australian factory has a comparative advantage in the production of transmissions.

Acquisition of an existing solar cell production plant would be considered

The manager of a U.S. office building hires a local company owned by a recent Canadian immigrant to handle landscape maintenance. This is a form of

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are transaction costs of US$50, and the exchange rate is 20 rand/US$, then

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.

Your U.S.-based company is selling parts to a company in Chile and the company will pay you 9.8 million pesos in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%. If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will

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 above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

The price used to sell goods or services between subsidiaries in a company is

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. If imported rice is banned, the loss in social welfare is

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

International price discrimination for a good is possible if

One of the major effects of trade liberalization has been

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. Suppose a free market exists. An import quota of 30 units would

When deciding where to produce, a key decision criterion for a multinational enterprise

Your U.S.-based company is selling parts to a company in Chile and the company will pay you US$10,000 in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

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

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 transmissions per day.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Filters

Exam 17: Global Business

Acquisition of an existing solar cell production plant would be considered

The manager of a U.S. office building hires a local company owned by a recent Canadian immigrant to handle landscape maintenance. This is a form of

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are transaction costs of US$50, and the exchange rate is 20 rand/US$, then

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.

Your U.S.-based company is selling parts to a company in Chile and the company will pay you 9.8 million pesos in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%. If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will

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 above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

The price used to sell goods or services between subsidiaries in a company is

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. If imported rice is banned, the loss in social welfare is

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

International price discrimination for a good is possible if

One of the major effects of trade liberalization has been

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S1 represents the world supply curve. Suppose a free market exists. An import quota of 30 units would

When deciding where to produce, a key decision criterion for a multinational enterprise

Your U.S.-based company is selling parts to a company in Chile and the company will pay you US$10,000 in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

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

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 transmissions per day.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Filters

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. If imported rice is banned, the loss in social welfare is

-The above figure shows the market for rice in Japan. S₂ represents the domestic supply curve, and S₁ represents the world supply curve. Suppose a free market exists. An import quota of 30 units would