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Question 1

Collusion between firms is more likely if

Accepted Answer

There is an industry price leader.

Question 2

The internationalization of born global firms relies on

Accepted Answer

An entrepreneurial team with international experience

Question 3

An import quota is similar to a ________ in its effect on imports, except that an import quota ________.

Accepted Answer

tariff; does not generate government revenue

Question 4

Asset specificity refers to investments that are

Accepted Answer

specific to a business relationship

Question 5

Second movers face greater technology and market uncertainties.

Accepted Answer

False

Question 6

Which of the following practices is not penalized by the European Union as a competition authority?

Accepted Answer

Entering another EU country without agreement of national authorities

Question 7

The location decision of foreign entry decision is driven by costs of production at the site.

Accepted Answer

False

Question 8

The existence of external economies of scale

Accepted Answer

is associated with a perfectly competitive industry.

Question 9

The tariff levied in a "large country" (Home), lowers the world price of the imported good. This causes :

Accepted Answer

foreign consumers to demand less of the good on which was levied a tariff.

Question 10

An FDI in which type of activity would be an example of upstream vertical FDI?

Accepted Answer

A manufacturing facility for components of the firm’s main product

Question 11

In the Ricardian model, trade between two countries can benefit both countries if:

Accepted Answer

each country exports that good in which it has a comparative advantage.

Question 12

Which of the following is not a motive for establishing FDIs?

Accepted Answer

Finance seeking

Question 13

Collusion between firms is more likely if

Accepted Answer

There is an industry price leader

Question 14

A lower tariff on imported steel would most likely benefit:

Accepted Answer

domestic consumers of steel.

Question 15

The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that the former:

Accepted Answer

has two factors of production.

Question 16

In the 2-factor, 2 good Heckscher-Ohlin model, the production possibility frontier is kinked when:

Accepted Answer

there is no factor substitution in production

Question 17

Which of the following industry characteristics reduce the likelihood of collusion between firms?

Accepted Answer

Firms competing with slightly differentiated products

Question 18

Sun Tzes quote if you know the enemy and know yourself, your victory with stand in now doubt points to the importance of

Accepted Answer

Competitor analysis and resource analysis

Question 19

When a country both exports and imports a type of commodity, the country is engaged in

Accepted Answer

intra-industry trade.

Question 20

Agglomeration advantages arise from

Accepted Answer

Clustering economic activities in certain locations

Question 21

A joint venture is established by two or more parent firms.

Accepted Answer

True

Question 22

An important difference between tariffs and quotas is that tariffs :

Accepted Answer

generate tax revenue for the government.

Question 23

In the Ricardian model, a country engaging in trade according to comparative advantage gains from trade because it :

Accepted Answer

is producing imports indirectly more efficiently than it could domestically

Question 24

An export subsidy differs from a tariff in each of the following ways EXCEPT :

Accepted Answer

a tariff results in an efficiency loss.

Question 25

If a firm's output more than doubles when all inputs are doubled, production is said to occur under conditions of

Accepted Answer

increasing returns to scale.

Question 26

Location-bound resources are resources that cannot be transferred from one country to another

Accepted Answer

True

Question 27

Firms from emerging markets without ownership (firm specific advantage) should not engage in FDIs.

Accepted Answer

False

Question 28

Differences incorporate taxation rules between countries substantially affect the patterns of FDI flows across countries

Accepted Answer

True

Question 29

Which of the following is not an element of the OLI paradigm?

Accepted Answer

All of the above

Question 30

Ad valorem tariffs are:

Accepted Answer

import taxes calculated as a fraction of the value of the imported goods.

Question 31

What is the relationship between the stock and flow of FDI?

Accepted Answer

FDI flows add to the FDI stock

Question 32

When there are external economies of scale, an increase in the size of the market will

Accepted Answer

increase the number of firms and lower the price per unit.

Question 33

If a good is capital intensive it means that the good is produced

Accepted Answer

using relatively more capital than goods that are not capital intensive.

Question 34

In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in :

Accepted Answer

relative abundance of factors of production.

Question 35

In the Heckscher-Ohlin model, countries are assumed to differ only in terms of their

Accepted Answer

factor productivities.

Question 36

Specific tariffs are:

Accepted Answer

import taxes calculated as a fraction of the value of the imported goods.

Question 37

A multinational enterprise is defined as an enterprise that

Accepted Answer

Has subsidiaries in more than one country

Question 38

Non-equity entry modes include licensing, management contracts, and exporting.

Accepted Answer

True

Question 39

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to :

Accepted Answer

differences in labor productivity.

Question 40

How can a host country encourage FDI inflows?

Accepted Answer

Provide subsidies to the firm

Question 41

First-mover advantages are only of concern in branded consumer goods industries.

Accepted Answer

False

Question 42

How can a host country encourage FDI inflows?

Accepted Answer

Provide subsidies to the firm

Question 43

Which of the following does not apply in the case of franchising

Accepted Answer

It's hard for franchisor to control how technology and brand name are used

Question 44

International trade based on external scale economies in both countries is likely to be carried out by

Accepted Answer

a relatively large number of price competing firms.

Question 45

Small and medium enterprises face which challenges in terms of internationalization:

Accepted Answer

Limited financial resources

Question 46

“Born global” are firms that sell in every country of the world.

Accepted Answer

False

Question 47

Prisoner’s dilemma is a concept from game theory that helps explaining while cartels often break down.

Accepted Answer

False

Question 48

Which of the following does not describe an ownership advantage in the OLI framework?

Accepted Answer

Easily immitable

Question 49

In the Ricardian model, international trade can lead to increases in:

Accepted Answer

output of both products and consumer welfare in both countries.

Question 50

The expectation of knowledge spillovers isa big motivation for governments to attract foreign investors to their country

Accepted Answer

True

Question 51

An entry mode, foreign investors need to create local operation in its own image without incorporate existing structures

Accepted Answer

Greenfield investment

Question 52

Licensing is a form of contract that

Accepted Answer

transfers a technology and the rights to use it.

Question 53

The most vocal political pressure for more tariffs is generally made by:

Accepted Answer

producers lobbying for import tariffs

Question 54

A distributor is a trade intermediary trading on its own account.

Accepted Answer

True

Question 55

Reduced contract monitoring and enforcement costs are an example of an internalization advantage.

Accepted Answer

True

Question 56

Foreign portfolio investment (FPI) is a special case of foreign direct investment (FDI).

Accepted Answer

False

Question 57

What are the benefits of FDIs for the home country of the firm investing abroad (FDI outflows)?

Accepted Answer

Firms learn valuable skills from exposure to foreign markets

Question 58

International trade based solely on internal scale economies in both countries is likely to be carried out by

Accepted Answer

a few large firms in an imperfectly competitive industry.

Question 59

What is the relationship between Foreign Direct Investment (FDI) flow and FDI stock?

Accepted Answer

FDI flows add to FDI stock

Question 60

An exporting firm is

Accepted Answer

A firm selling products or services to another country

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Questions 60

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Questions 60