AFM 131 FINAL EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS
Country A is an extremely efficient producer of tin. However, its climate and
terrain makes it difficult to produce corn. According to the theory of comparative
advantage, Country A should:
A. produce both tin and corn in order to remain self-sufficient.
B. watch the global market to see which product brings the highest price.
C. import the resources needed to produce corn.
D. concentrate its production on tin and buy corn.
D. concentrate its production on tin and buy corn.
The fee paid to a firm in a licensing agreement that gives another firm the right to
manufacture their product or use its trademark is called:
A) an outsource agreement.
B) a cartel.
C) a royalty.
D) a trading bloc.
C) a royalty.
The difference between money coming into and leaving the country plus money
flows from factors such as tourism and foreign aid is referred to as the:
, A)balance of payments.
B)trade deficit.
C)balance of trade
D)balance of money flows.
A)balance of payments.
A major concern voiced by Canadian critics of NAFTA is that it would result in:
A)higher prices for consumer goods.
B)increased illegal immigration from Mexico.
C)loss of jobs in the Canadian economy.
D)national security problems.
C)loss of jobs in the Canadian economy.
Which of the following strategies for competing in the global markets involves the
lowest profit potential?
A)Licensing
B)Contract manufacturing
C)Foreign subsidiary
D)Joint venture
A)Licensing
An unfavourable balance of trade occurs when the value of:
COMPLETE SOLUTIONS
Country A is an extremely efficient producer of tin. However, its climate and
terrain makes it difficult to produce corn. According to the theory of comparative
advantage, Country A should:
A. produce both tin and corn in order to remain self-sufficient.
B. watch the global market to see which product brings the highest price.
C. import the resources needed to produce corn.
D. concentrate its production on tin and buy corn.
D. concentrate its production on tin and buy corn.
The fee paid to a firm in a licensing agreement that gives another firm the right to
manufacture their product or use its trademark is called:
A) an outsource agreement.
B) a cartel.
C) a royalty.
D) a trading bloc.
C) a royalty.
The difference between money coming into and leaving the country plus money
flows from factors such as tourism and foreign aid is referred to as the:
, A)balance of payments.
B)trade deficit.
C)balance of trade
D)balance of money flows.
A)balance of payments.
A major concern voiced by Canadian critics of NAFTA is that it would result in:
A)higher prices for consumer goods.
B)increased illegal immigration from Mexico.
C)loss of jobs in the Canadian economy.
D)national security problems.
C)loss of jobs in the Canadian economy.
Which of the following strategies for competing in the global markets involves the
lowest profit potential?
A)Licensing
B)Contract manufacturing
C)Foreign subsidiary
D)Joint venture
A)Licensing
An unfavourable balance of trade occurs when the value of:
