BU402: Final Exam| Verified solutions
According to the U.S.Department of Commerce, in the United States _____ occurs whenever a U.S.
citizen, organization, or affiliated group tales and interest of 10 percent or more in a foreign business
entity
A. Multilateral Investment
B. Foreign Direct Investment
C. Reciprocal Foreign Investment
D. International Divestment
E. Assest Divestment - ANswer- B.
The _____ of foreign direct investment refers to the amount of FDI undertaken over a given period.
(normally a year)
A. Portfolio
B. Flow
C. Status
D. Stock
E. Fragment - ANswer- B.
Historically, most FDI ha be directed at the ____ nations of the world
A. Underdeveloped
B. Developing
C. Developed
D. Emerging
E. Least Developed - ANswer- C.
,A firm will favor FDI over exporting as an entry strategy when:
A. The cost of establishing production facilitates are high
B. The transportation costs or trade barriers are high
C. There are problems associated with doing business in a different culture
D. The products involved have a high value-to-weight ratio
E. The firm wants to occupy a position that falls inside the efficiency frontier - ANswer- B.
The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing,
marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the
_____.
A. Comparative Advantage Theory
B. Distribution Theory
C. New Trade Theory
D. Internalization Theory
E. Licensing Theory - ANswer- D.
The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling and
buying of the domestic market. Which of the following terms explains the market structure of the
cement industry in Erbia?
A. Perfect Competiton
B. Monopoly
C. Oligopoly
D. Dual Monopoly
E. Monopsony - ANswer- C.
The idea behind multipoint competition is to ensure that:
, A. A rival does not dominant a market and use those profits to drive competitive attacks elsewhere
B. The competitors cooperate with each other to establish a cartel
C. No other competitors can enter the market unless they resort to licensing with the initial pioneers
D. Growing technologies or business methods in new markets are transferred to establish markets
E. The firms in an industry prefer FDI over licensing or exporting - ANswer- A.
Economists refer to knowledge "spillovers" that occur when companies in the same industry are located
in the same area as:
A. Technology Flows
B. Overlaps
C. Corporate Espionage
D. Externalities
E. A Free Rider Problem - ANswer- D.
Many host countries are concerned that a foreign-owned manufacturing plant may import many
components from its home country, which has negative implications for the host country's:
A. Free Trade Agreement
B. Inward FDI
C. Sovereignty
D. Balance-of-Payments
E. Gold Reserves - ANswer- D.
According to the _____, FDI has both benefits and costs and should be allowed only if the benefits
outweighs the cost
A. Eclectic Paradigm Theory
B. Free Market View
C. Pragmatic Nationalist View
According to the U.S.Department of Commerce, in the United States _____ occurs whenever a U.S.
citizen, organization, or affiliated group tales and interest of 10 percent or more in a foreign business
entity
A. Multilateral Investment
B. Foreign Direct Investment
C. Reciprocal Foreign Investment
D. International Divestment
E. Assest Divestment - ANswer- B.
The _____ of foreign direct investment refers to the amount of FDI undertaken over a given period.
(normally a year)
A. Portfolio
B. Flow
C. Status
D. Stock
E. Fragment - ANswer- B.
Historically, most FDI ha be directed at the ____ nations of the world
A. Underdeveloped
B. Developing
C. Developed
D. Emerging
E. Least Developed - ANswer- C.
,A firm will favor FDI over exporting as an entry strategy when:
A. The cost of establishing production facilitates are high
B. The transportation costs or trade barriers are high
C. There are problems associated with doing business in a different culture
D. The products involved have a high value-to-weight ratio
E. The firm wants to occupy a position that falls inside the efficiency frontier - ANswer- B.
The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing,
marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the
_____.
A. Comparative Advantage Theory
B. Distribution Theory
C. New Trade Theory
D. Internalization Theory
E. Licensing Theory - ANswer- D.
The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling and
buying of the domestic market. Which of the following terms explains the market structure of the
cement industry in Erbia?
A. Perfect Competiton
B. Monopoly
C. Oligopoly
D. Dual Monopoly
E. Monopsony - ANswer- C.
The idea behind multipoint competition is to ensure that:
, A. A rival does not dominant a market and use those profits to drive competitive attacks elsewhere
B. The competitors cooperate with each other to establish a cartel
C. No other competitors can enter the market unless they resort to licensing with the initial pioneers
D. Growing technologies or business methods in new markets are transferred to establish markets
E. The firms in an industry prefer FDI over licensing or exporting - ANswer- A.
Economists refer to knowledge "spillovers" that occur when companies in the same industry are located
in the same area as:
A. Technology Flows
B. Overlaps
C. Corporate Espionage
D. Externalities
E. A Free Rider Problem - ANswer- D.
Many host countries are concerned that a foreign-owned manufacturing plant may import many
components from its home country, which has negative implications for the host country's:
A. Free Trade Agreement
B. Inward FDI
C. Sovereignty
D. Balance-of-Payments
E. Gold Reserves - ANswer- D.
According to the _____, FDI has both benefits and costs and should be allowed only if the benefits
outweighs the cost
A. Eclectic Paradigm Theory
B. Free Market View
C. Pragmatic Nationalist View
