C211 Second OA quizzes Latest Update Questions and Verified Correct Answers Guaranteed Success _ _ is an attack on a competitor's other markets if this competitor attacks a firm's original
market. - Correct Answer: Cross-market retaliation
___ best suits situations where the pressures to globalize are relatively low, and local firms' strengths lie in a deep understanding of local markets. - Correct Answer: Defender strategy
___ occurs when firms engage the same rivals in numerous markets. - Correct Answer: Multimarket competition
___ refers to non-financial companies spreading out its activities in different currency zones in order to offset the currency losses in certain regions through gains in other
regions. - Correct Answer: Strategic hedging
____ refers to the amount of resources committed to entering a foreign market. -
Correct Answer: Scale of entry
____ refers to the replacement of cross-border markets with one firm locating in two or
more countries. - Correct Answer: Internalization
_____ allow participants to buy and sell currencies now for future delivery. - Correct
Answer: Forward transactions
_____ are government payments to domestic firms. - Correct Answer: Subsidies
_____ are tariffs levied on imports sold below costs to drive domestic firms out of
business. - Correct Answer: Antidumping duties
_____ is a country's international transaction statement, which includes merchandise trade, service trade, and capital movement. - Correct Answer: Balance of payments
_____ is defined as the conversion of one currency into another at Time 1, with an agreement to revert it back to the original currency at a specific Time 2 in the future. -
Correct Answer: Currency swap
_____ is the strategy of treating the entire world as one market. - Correct Answer: Standardization
_____ refers to the clustering of economic activities in certain locations. - Correct
Answer: Agglomeration
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_____ refers to the deal struck by MNEs and host governments, which change their
requirements after the initial FDI entry. - Correct Answer: Obsolescing bargain
_____ refers to the total accumulation of inbound FDI in a country or outbound FDI
from a country. - Correct Answer: FDI stock
- If the market price is $10, the firm will earn. - Correct Answer: negative economic
profits in the short run but remain in business.
A _____ antirust policy would protect established firms that have already invested and
nurtured an industry from new entrants. - Correct Answer: pro-incumben
A _____ is defined as an innovation that is adopted first in emerging economies and
then diffused around the world. - Correct Answer: reverse innovation
A _____ is the price of one currency, such as the dollar, in terms of another, such as
the euro. - Correct Answer: foreign exchange rate
A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can, given the reserve requirement. - Correct Answer: it has $800 in reserves and $9,200 in loans
A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the
money supply? - Correct Answer: $150
A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises.The substitution effect, by itself, suggests that the consumer will consume - Correct
Answer: more popcorn and less Pepsi
A conversion that determines the equivalent amount of goods and services that different currencies can buy is known as _____. - Correct Answer: purchasing power parity
A currency board is a monetary authority that issues notes and coins convertible into a
key foreign currency at a _____ exchange rate. - Correct Answer: Fixed
A firm that shuts down temporarily has to pay. - Correct Answer: its fixed costs but not its variable costs.
A goal of monetary policy and fiscal policy is to - Correct Answer: offset shifts in aggregate demand and thereby stabilize the economy
A improvement in production technology will shift the. - Correct Answer: supply curve to the right.
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A manager arguing against currency hedging would most likely argue that _____. -
Correct Answer: currency hedging eats into company profits
A monopolist's profits with price discrimination will be - Correct Answer: higher than if the firm charged just one price because the firm will capture more consumer surplus
A natural monopoly occurs when. - Correct Answer: there are economies of scale over the relevant range of output.
A perfectly price-discriminating monopolist is able to - Correct Answer: maximize profit and produce a socially optimal level of output
A vertical FDI refers to a type of FDI in which _____. - Correct Answer: a firm moves upstream or downstream at different value chain stages in a host country
A(n) _____ is a non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations
to a domestic agency or firm. - Correct Answer: BOT agreement
According to one theory, advertising sends a signal to consumers about the quality of the product being offered. An implication of this theory is that - Correct Answer: the existence of an expensive advertisement is more important than the content of the advertisement.
An increase in the money supply will - Correct Answer: reduce interest rates, increasing investment and aggregate demand.
An increase in the price of a good will. - Correct Answer: decrease quantity demanded.
Antitrust laws have economic benefits that outweigh the costs if they - Correct Answer: prevent mergers that would decrease competition and raise the costs of production
As the number of firms in an oligopoly increases, - Correct Answer: the total quantity of output produced by firms in the market gets closer to the socially efficient quantity
As the number of sellers in an oligopoly becomes very large, - Correct Answer: the quantity of output approaches the socially efficient quantity
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit. At Q = 1,000, the firm's profits equal. - Correct
Answer: $1,000
Assume that Samorola has entered into an enforceable resale price maintenance agreement with Trint and U-Mobile. Which of the following will always be true? - Correct Answer: U-Mobile and Trint will always sell Samorolas for exactly the same price
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