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Exam 3: Doing Business in Global Markets

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Question 51

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The U.S. government, responding to pressure from political lobbyists representing the U.S. steel industry, will impose a tax on steel products imported from South America. This is an example of a(n)

A) protective tariff.
B) revenue tariff.
C) quota.
D) embargo.

E) A) and B)
F) A) and C)

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Question 52

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Reviewing the recent experience of the United States in global markets reveals that the U.S has

A) a merchandise trade surplus with the rest of the world.
B) a large trade deficit with China.
C) avoided becoming a debtor nation.
D) attracted very little foreign direct investment.

E) None of the above
F) B) and C)

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Question 53

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The three countries participating in NAFTA are

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

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

________ differences such as insufficient electrical power and transportation systems can present special problems for U.S. firms when attempting to enter global markets.

One of the goals of the World Trade Organization (WTO) is to eliminate national subsidies on agricultural products.

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

A risk unique to firms with direct investment in a foreign country is the potential takeover of the firm's assets by the government of that country. This takeover is called a(n)

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

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

One of the purposes of Export Assistance Centers is to

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

Which of the following statements is the best description of comparative advantage?

One of the rules of a common market is that all participating nations will uphold a common external tariff on goods and services imported from countries that are not of the trading bloc. Goods imported from nonmember countries are more expensive than goods coming from member countries.

PepsiCo entered into a long-term contract with a South African beverage company. The contract calls for the South African firm to produce and market Pepsi products in the country. PepsiCo will receive royalties on each case of sodas sold. This is an example of

Mini-Case Ever since he was five years old, Rhett Tenna has had poor eyesight and as an eyeglass wearer he suffered through all the names that went along with it. Rhett eventually switched from glasses to contacts, but he always wondered why his glasses were not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eyewear synonymous with fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames. A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -Rhett heard predictions that the value of the U.S. dollar is likely to increase substantially over the next six months. This should

Many of the toys sold in the United States are imported from Taiwan because the Taiwanese can produce these products more efficiently than U.S. companies. This is an example of

Mini-Case Ever since he was five years old, Rhett Tenna has had poor eyesight and as an eyeglass wearer he suffered through all the names that went along with it. Rhett eventually switched from glasses to contacts, but he always wondered why his glasses were not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eyewear synonymous with fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames. A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -At first, Rhett believed he should maintain all of his manufacturing within the United States and simply export his designer frames to foreign sellers. However, he lacked expertise in exporting. Rhett decided to see if the federal government could provide any help by contacting a(n)

In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called