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Exam 3: Doing Business in Global Markets

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Question 171

True/False

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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.

A) True
B) False

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Question 172

Multiple Choice

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was an 18th century belief that a nation should try to sell more goods to other nations than it buys from them.

A) Capitalism
B) Comparative advantage
C) Mercantilism
D) Inflation

E) A) and C)
F) A) and D)

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Question 173

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A United States firm recently won a large contract with a company in Bangladesh by providing government officials and company officials with American cars and promises to provide monetary gifts in exchange for the business. Fortunately, U.S. Law, under the Foreign Corrupt Practices Act permits U.S. companies to operate in this manner.

In volume of exports, the three leading nations are:

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

The "China price" means the market value that U.S. firms place on products that they export to China.

A common market is a group of countries that have no internal tariffs among member nations, yet have a common external tariff.

Protective tariffs are designed to raise money for the government.

If you travel to Mexico and the exchange rate is 12 pesos for one U.S. dollar, the peso is said to have strength against the dollar because you can get so many more pesos that you can dollars.

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

The nation of New Maraguay has a small commercial airplane industry that is struggling to keep up with the two large international commercial airplane manufacturers. The other nations in its trading bloc have agreed on an import quota on commercial airplanes, which limits the number of planes that any country in the trading bloc can buy from other airplane manufacturers. This strategy is necessary to help the New Maraguay's airplane manufacturer while it is in its infancy.

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

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

Nike its products in foreign countries, where labor is cheap and production sites are owned by other companies. This strategy allows Nike to experiment in new markets without incurring large start-up costs involved with building their own production facilities.

According to the theory of mercantilism, a country should develop policies that encourage a favorable balance of trade.

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

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.

An import quota is a complete ban on the import or export of certain products.

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.

Jake's family business sells and installs tile in bathrooms and kitchens. He is convinced that heater coils under bathroom floor tiles is the best thing since sliced bread. In his effort to avoid domestic competition, he sets his sights on the vast Chinese market. Much to his surprise, most Chinese people do not yet have indoor plumbing and are accustomed to government-run communal baths. Jake realized that his global marketing effort is hampered by: