Question 1

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 20 rand/US$,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. B

Question 2

The welfare loss from an import quota is greater than that of an equivalent tariff because

Accepted Answer

A)  tariff revenues can be used to society's benefit. 
B)  the loss in consumer surplus is not as large. 
C)  domestic producers gain more from a quota than from a tariff. 
D)  tariff revenues represent an additional deadweight loss. 
A)  tariff revenues can be used to society's benefit. 
B)  the loss in consumer surplus is not as large. 
C)  domestic producers gain more from a quota than from a tariff. 
D)  tariff revenues represent an additional deadweight loss. A

Question 3

A firm engaging in rent seeking activity

Accepted Answer

A)  is breaking the law. 
B)  is willing to spend up to the gain in producer surplus. 
C)  is irrational. 
D)  increases societal gain. 
A)  is breaking the law. 
B)  is willing to spend up to the gain in producer surplus. 
C)  is irrational. 
D)  increases societal gain. B

Question 4

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 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

Accepted Answer

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

Question 6

A country uses strategic trade policy to

Accepted Answer

A)  increase profits that accrue to domestic producers. 
B)  affect the exchange rate of its currency. 
C)  impose countervailing duties. 
D)  allow dumping of imports to increase consumer surplus. 
A)  increase profits that accrue to domestic producers. 
B)  affect the exchange rate of its currency. 
C)  impose countervailing duties. 
D)  allow dumping of imports to increase consumer surplus.

Question 7

If an Albanian company hires a U.S.-based law firm,it is

Accepted Answer

A)  insourcing, from a U.S.-perspective. 
B)  using domestic outsourcing. 
C)  changing into a multinational enterprise. 
D)  vertically integrating. 
A)  insourcing, from a U.S.-perspective. 
B)  using domestic outsourcing. 
C)  changing into a multinational enterprise. 
D)  vertically integrating.

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.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Accepted Answer

A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units. 
A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units.

Question 9

Your U.S.-based company is selling parts to a company in Bangladesh.If the Bangladeshi company purchases a futures contract

Accepted Answer

A)  the Bangladeshi company bears the exchange rate risk. 
B)  your company bears the exchange rate risk. 
C)  the companies share in the exchange rate risk. 
D)  there is no exchange rate risk. 
A)  the Bangladeshi company bears the exchange rate risk. 
B)  your company bears the exchange rate risk. 
C)  the companies share in the exchange rate risk. 
D)  there is no exchange rate risk.

Question 10

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 11

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

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

Question 12

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 13

A firm that buys goods that it would normally produce internally from an international company is using

Accepted Answer

A)  transfer pricing. 
B)  insourcing. 
C)  international outsourcing. 
D)  domestic outsourcing. 
A)  transfer pricing. 
B)  insourcing. 
C)  international outsourcing. 
D)  domestic outsourcing.

Question 14

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

Accepted Answer

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

Question 15

Outsourcing generally results from

Accepted Answer

A)  unpatriotic behavior. 
B)  comparative advantage. 
C)  tax evasion. 
D)  rent seeking. 
A)  unpatriotic behavior. 
B)  comparative advantage. 
C)  tax evasion. 
D)  rent seeking.

Question 16

The North American Free Trade Agreement is an example of

Accepted Answer

A)  a beggar-thy-neighbor trade policy. 
B)  a preferential trade arrangement. 
C)  a multinational quota system. 
D)  a general agreement on tariffs and trade. 
A)  a beggar-thy-neighbor trade policy. 
B)  a preferential trade arrangement. 
C)  a multinational quota system. 
D)  a general agreement on tariffs and trade.

Question 17

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

Accepted Answer

A)  it has been selling Barbie dolls for a long time. 
B)  the Barbie doll is the top import into the U.S. 
C)  international trade allows them to produce a wide variety of doll types at many price points. 
D)  there are low fixed costs for product design. 
A)  it has been selling Barbie dolls for a long time. 
B)  the Barbie doll is the top import into the U.S. 
C)  international trade allows them to produce a wide variety of doll types at many price points. 
D)  there are low fixed costs for product design.

Question 18

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

Accepted Answer

A)  competitive production. 
B)  comparative advantage. 
C)  selective advantage. 
D)  absolute advantage. 
A)  competitive production. 
B)  comparative advantage. 
C)  selective advantage. 
D)  absolute advantage.

Question 19

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 10 rand/US$,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 the U.S., and selling it in South Africa and the price in the U.S. will drop. 
C)  there is no arbitrage opportunity. 
D)  Unable to determine, since France is in the eurozone and we would need exchange rates in euro terms. 
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 the U.S., and selling it in South Africa and the price in the U.S. will drop. 
C)  there is no arbitrage opportunity. 
D)  Unable to determine, since France is in the eurozone and we would need exchange rates in euro terms.

Question 20

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

Accepted Answer

A)  Brazilians decrease their demand for Mexican goods. 
B)  Brazilians increase their demand for Mexican goods. 
C)  Mexicans decrease their demand for Brazilian goods. 
D)  Not enough information to determine what happens. 
A)  Brazilians decrease their demand for Mexican goods. 
B)  Brazilians increase their demand for Mexican goods. 
C)  Mexicans decrease their demand for Brazilian goods. 
D)  Not enough information to determine what happens.

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 20 rand/US$,then

The welfare loss from an import quota is greater than that of an equivalent tariff because

A firm engaging in rent seeking activity

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 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

A country uses strategic trade policy to

If an Albanian company hires a U.S.-based law firm,it is

-The above figure shows the market for rice in Japan.s₂ represents the domestic supply curve,and s₁ represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Your U.S.-based company is selling parts to a company in Bangladesh.If the Bangladeshi company purchases a futures contract

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

Acquisition of an existing solar cell production plant would be considered

A firm that buys goods that it would normally produce internally from an international company is using

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

Outsourcing generally results from

The North American Free Trade Agreement is an example of

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

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

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 10 rand/US$,then

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

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

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 20 rand/US$,then

The welfare loss from an import quota is greater than that of an equivalent tariff because

A firm engaging in rent seeking activity

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 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

A country uses strategic trade policy to

If an Albanian company hires a U.S.-based law firm,it is

-The above figure shows the market for rice in Japan.s₂ represents the domestic supply curve,and s₁ represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Your U.S.-based company is selling parts to a company in Bangladesh.If the Bangladeshi company purchases a futures contract

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

Acquisition of an existing solar cell production plant would be considered

A firm that buys goods that it would normally produce internally from an international company is using

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

Outsourcing generally results from

The North American Free Trade Agreement is an example of

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

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

If a bottle of fine French wine costs US$250 in the U.S.,2500 rand in South Africa,there are no transaction costs,and the exchange rate is 10 rand/US$,then

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

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