Deck 3: Doing Business in Global Markets

Question 1

Comparative advantage theory states that a country should sell to other countries those products that it produces most efficiently and buy from other countries those products it cannot produce as efficiently.

Answer 1

True

Question 2

The United States imports more products and services than any nation in the world.

Answer 2

True

Question 3

Free trade is the movement of goods and services between nations without political or economic barriers.

Answer 3

True

Question 4

The United States is the largest exporter in the world.

Question 5

With respect to free trade, many U.S. citizens prefer "fair trade, not free trade."

Question 6

Opportunities for college graduates in international business continue to decrease as it gets more expensive to travel abroad.

Question 7

Global trade includes the exchange of art, sports, and cultural events.

Question 8

Global trade is the exchange of goods and services between countries.

Question 9

Exporting is the selling of products to another country.

Question 10

Free trade results in a mutually beneficial exchange between and among nations.

Question 11

A country has an absolute advantage if the production of a specific product is more efficient than all other nations.

Question 12

One reason countries trade with other countries is that even technologically advanced nations cannot produce all the products their people want and need.

Question 13

Today, over 90% of the companies doing business globally believe it is important for their employees to have experience working in other countries.

Question 14

According to the theory of comparative advantage, a country should buy from other countries those goods it produces most efficiently.

Question 15

An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.

Question 16

Today, there are more countries that have some form of absolute advantage in a product or service, than years ago.

Question 17

Competition in exporting is very intense.

Question 18

In order to enjoy the highest standard of living possible, comparative advantage theory states that all nations should strive to become self-sufficient.

Question 19

Absolute advantage is the basis for most global trade today.

Question 20

Importing is the selling of products to another country.

Question 21

If your business has an outstanding product, exporting offers a quick, easy, no-hassle way to improve your profitability.

Question 22

After finishing college, Nathan joined his uncle's company in Miami, FL, a company that buys bauxite, copper, and other minerals from the country of Chile, and brings them into the U.S. Everyday, he brokers trades with mines in Chile. His uncle's company is in the export business.

Question 23

When trading in global markets, most countries prefer to import more than they export.

Question 24

The United States enjoys a trade surplus in the global market.

Question 25

Dumping is the practice of selling products in foreign markets at lower prices than what domestic firms are charging for the same product.

Question 26

International trade is not limited to multinational corporations. Small businesses do about 30% of all exporting out of the U.S.

Question 27

Products made in Canada are sold in the U.S. because these two nations agree to eliminate economic and political barriers between nations. They participate in free trade.

Question 28

U.S. exports boost the U.S. economy.

Question 29

A favorable balance of trade occurs when the value of a country's imports exceeds the value of its exports.

Question 30

Recently the United States has experienced its highest trade deficits with China.

Question 31

Foreign travel can help in identifying global business opportunities.

Question 32

In southern California, there are banana plantations. These plantations cannot produce all the bananas consumed by persons in the U.S. The fact that the U.S. grows and sells bananas gives it a comparative advantage in bananas. It is not an absolute advantage and that is why we choose to import bananas from other countries, as well.

Question 33

Small businesses are less involved in global trade today than in the past.

Question 34

Just about anything that can be sold in the United States can also be sold to buyers in other countries.

Question 35

A trade deficit is the same as a favorable balance of trade.

Question 36

In order to prevent dumping, U.S. law stipulates that foreign firms selling similar products as domestic firms to U.S. customers must charge at least 10% more than what U.S. firms charge.

Question 37

Many foreign students in U.S. colleges and universities have discovered profitable opportunities by importing goods from their home countries into the United States.

Question 38

Even though the U.S. exports a vast amount of goods globally, it exports a much lower percentage of its products than other countries do.

Question 39

A favorable balance of trade occurs when the value of a country's exports exceeds the value of its exports.

Question 40

The balance of payments measures the inflows and outflows of money from tourism, foreign aid, military expenditures and foreign investments as well as flows resulting from exports and imports.

Question 41

Franchising is popular both domestically and internationally.

Question 42

Compared to many other industrialized countries, the United States has historically exported a lower percentage of its products than other countries do.

Question 43

The United States currently enjoys a favorable balance of trade with the rest of the world.

Question 44

A favorable balance of trade occurs when the value of a nation's exports exceeds its imports.

Question 45

Compared to many other industrialized countries, the United States has historically exported a much higher percentage of its products than other countries do.

Question 46

The value of Chinese exports coming to the United States is greater than the value of goods China buys from the U.S. This results in a U.S. trade deficit with China.

Question 47

An advantage of licensing is that licensors spend little or no money to produce and market their products. These costs are born by the licensees.

Question 48

Some firms will practice "dumping" in order to gain a foothold in a new market.

Question 49

If visitors from Germany spend money at Florida's Walt Disney World, it will increase the U.S.'s unfavorable balance of payments.

Question 50

The country of New Florentina mines more fluorite each year than it needs for its own manufacturing purposes. Recently, a neighboring country complained that its manufacturing sites could buy fluorite from New Florentina cheaper than they could buy it from its own mines. A government trading expert's claim that New Florentina is dumping fluorite onto its neighbor's market is probably accurate.

Question 51

In any given year, the United States' cash outflow to other nations exceeds its cash inflow from other nations.

Question 52

As the most powerful economy in the world, the United States does not need to concern itself with having an unfavorable balance of payments.

Question 53

Through licensing, domestic firms give foreign manufacturers/producers the right to produce their product and use their trademark in exchange for royalties.

Question 54

When competing in global markets, business organizations utilize a variety of strategies to reach foreign buyers.

Question 55

A Chinese steel manufacturer is selling certain types of steel in the United States at a price significantly lower than it sells the same steel in its home market. This practice may be a violation of U.S. law.

Question 56

When a firm agrees to license its product, it gains notoriety but gives up all revenues.

Question 57

The country of Hasastan exports $250 of goods and services and imports $170 of goods and services. Hasastan has an unfavorable balance of trade of $80.

Question 58

The U.S. government is reducing Export Assistance Centers due to businesses' lack of interest in their support.

Question 59

When the U.S. provides foreign aid to Israel and Egypt, a balance of payments outflow occurs.

Question 60

Japanese auto manufacturers, such as Toyota and Nissan, have invested billions of dollars in the United States by building new factories, warehouses, and offices. These investments increase favorably the balance of payments for the United States.

Question 61

While franchising is popular in the United States, it is not an accepted strategy for firms in the global market.

Question 62

Sovereign wealth funds (a form of foreign direct investment) are investment funds controlled by governments that hold large stakes in foreign companies.

Question 63

A firm desiring to enter a foreign market with a limited investment should consider licensing.

Question 64

Contract manufacturing is when a firm pays foreign manufacturers to produce its product. The foreign manufacturer places the domestic company's label on the products.

Question 65

As a form of franchising, sovereign wealth funds are getting very little attention as a strategy for doing business in foreign markets.

Question 66

According to current U.S. laws, American firms are prohibited from participating in joint ventures with foreign firms.

Question 67

Export trading companies assist businesses in reaching buyers, and dealing with customs, documentation, and payment.

Question 68

Foreign direct investment refers to the buying of goods produced in another country.

Question 69

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

Question 70

Contract manufacturing is a form of outsourcing.

Question 71

A disadvantage of creating a foreign subsidiary is the loss of control over technology and expertise used in the production of the product.

Question 72

A joint venture is a partnership in which two or more companies join to undertake a major project. All parties commit financing and risk to the project.

Question 73

One advantage of licensing as a strategy to enter the global market is the sharing of trade secrets.

Question 74

Firms with a physical presence in several different nations are considered multinational corporations.

Question 75

One advantage of licensing is the relatively low cost of entering a foreign market.

Question 76

Expropriation occurs when a host government takes over the assets of a foreign company.

Question 77

One advantage of franchising is that the parent corporation does not need to concern itself with adapting to the culture of another country.

Question 78

Any corporation that exports at least 50% of its total output can be classified as a multinational corporation.

Question 79

Contract manufacturing requires heavy start-up costs by the domestic company.

Question 80

One characteristic of an international joint venture is all parties sharing the risk of a major project.