4SA3 International Business Final
Exam Questions with Solutions
100% Pass
International business - CORRECT ANSWER-Commercial transactions that
cross borders of two or more nations
What are the two types of IB? - CORRECT ANSWER-international trade
foreign direct investment
Globalization - CORRECT ANSWER-the process by which businesses or other
organizations develop international influence or start operating on an international
scale.
Two types of globalization - CORRECT ANSWER-globalization of markets
(products, finance, human resources)
globalization of production
Drivers of globalization - CORRECT ANSWER-declining trade and investment
barriers
removal of restrictions to FDI
,technological change (the internet and lower transportation costs)
Changing demographic of the global economy - CORRECT ANSWER-declining
US dominance in the world economy and world trade
increasing percentage share of FDI by developing economies
changing nature of MNEs
What does Trade % of GDP indicate? - CORRECT ANSWER-a country's
dependence on trade (Luxembourg, Singapore, Switzerland are highly dependent;
China, Japan, US are not very dependent; Canada lies somewhere in the middle)
Mercantilism - CORRECT ANSWER-countries should try to increase their
exports while reducing their imports; zero-sum game
Theory of Absolute Advantage - CORRECT ANSWER-A country has an absolute
advantage in the production of a product when it is more efficient than ANY
OTHER country in producing it
Implications of the theory of absolute advantage - CORRECT ANSWER-
countries should specialize in the production of goods for which they have an
absolute advantage and should never produce goods that they can buy at a lower
cost from other countries
Theory of comparative advantage - CORRECT ANSWER-a country has a
comparative advantage in the production of a good if it products the good MOST
efficiently among ALL the goods it is able to produce
COPYRIGHT ALL RIGHTS RESERVED ©️ 2025
, Implications of the theory of comparative advantage - CORRECT ANSWER-a
country should export the goods that it produces most efficiently and import the
goods that it produces less efficiently
Factor Proportions Theory (Heckscher& Ohlin) - CORRECT ANSWER-
comparative advantage arises from differences in national factor endowments:
land, labour, and capital
Implications of factor proportions theory - CORRECT ANSWER-a country has a
comparative advantage in producing goods that use factors of production it has in
abundance; countries will export goods that make intensive use of those factors
that are locally abundant, while importing goods that make intensive use of factors
that are locally scarce
Under factor proportions theory, can you create a comparative advantage? -
CORRECT ANSWER-through culture (breeds high-skilled labour)
opportunity to create new industries
favourable government policies can help firms integrate and gain an advantage
New trade theory - CORRECT ANSWER-a comparative advantage may not be
the result of initial factor endowments, but instead be a result of a company's first-
mover advantage that leads to barriers to entry (scale economies and learning
curve)
Exam Questions with Solutions
100% Pass
International business - CORRECT ANSWER-Commercial transactions that
cross borders of two or more nations
What are the two types of IB? - CORRECT ANSWER-international trade
foreign direct investment
Globalization - CORRECT ANSWER-the process by which businesses or other
organizations develop international influence or start operating on an international
scale.
Two types of globalization - CORRECT ANSWER-globalization of markets
(products, finance, human resources)
globalization of production
Drivers of globalization - CORRECT ANSWER-declining trade and investment
barriers
removal of restrictions to FDI
,technological change (the internet and lower transportation costs)
Changing demographic of the global economy - CORRECT ANSWER-declining
US dominance in the world economy and world trade
increasing percentage share of FDI by developing economies
changing nature of MNEs
What does Trade % of GDP indicate? - CORRECT ANSWER-a country's
dependence on trade (Luxembourg, Singapore, Switzerland are highly dependent;
China, Japan, US are not very dependent; Canada lies somewhere in the middle)
Mercantilism - CORRECT ANSWER-countries should try to increase their
exports while reducing their imports; zero-sum game
Theory of Absolute Advantage - CORRECT ANSWER-A country has an absolute
advantage in the production of a product when it is more efficient than ANY
OTHER country in producing it
Implications of the theory of absolute advantage - CORRECT ANSWER-
countries should specialize in the production of goods for which they have an
absolute advantage and should never produce goods that they can buy at a lower
cost from other countries
Theory of comparative advantage - CORRECT ANSWER-a country has a
comparative advantage in the production of a good if it products the good MOST
efficiently among ALL the goods it is able to produce
COPYRIGHT ALL RIGHTS RESERVED ©️ 2025
, Implications of the theory of comparative advantage - CORRECT ANSWER-a
country should export the goods that it produces most efficiently and import the
goods that it produces less efficiently
Factor Proportions Theory (Heckscher& Ohlin) - CORRECT ANSWER-
comparative advantage arises from differences in national factor endowments:
land, labour, and capital
Implications of factor proportions theory - CORRECT ANSWER-a country has a
comparative advantage in producing goods that use factors of production it has in
abundance; countries will export goods that make intensive use of those factors
that are locally abundant, while importing goods that make intensive use of factors
that are locally scarce
Under factor proportions theory, can you create a comparative advantage? -
CORRECT ANSWER-through culture (breeds high-skilled labour)
opportunity to create new industries
favourable government policies can help firms integrate and gain an advantage
New trade theory - CORRECT ANSWER-a comparative advantage may not be
the result of initial factor endowments, but instead be a result of a company's first-
mover advantage that leads to barriers to entry (scale economies and learning
curve)
