1.???ive airlines control 90 percent of the aviation sector ofa country. The aviation industry in the country would be an example of a(n) __________________.a.???oligopoly.b.???onopoly.c.???oligarchy.d.???erfectly competitive market.?.???_______ theory is also known as the market imperfections theory.a.???Perfect marketsb.???roduct life-cyclec.???Internalizationd.???andom walk?.???omputer Contractors has given a foreign entity the right to produce and sell its computer parts in return for a royalty fee on every unit sold. This is called __________________.a.???an acquisition.b.???icensing.c.???vertical FDI.d.??? greenfield investment.?.???he total accumulated value of foreign-owned assets at a given time is called the ________ of FDI.a.???stockb.???ergerc.???flowd.???roduct?Read the case below and answer the questions that follow (Q. 20 – Q.24) (1 pt/ea)? firm has three basic choices if it wants to sell its products in a foreign market – exporting, licensing, and foreign direct investment (FDI). The choice of the best option depends on characteristics of the product, the processes used to make these products, the control a firm needs to exercise over operations, and how the know-how of the firm might be protected. The best option is a strategic choice the international business manager must make, considering the interplay among these factors.Internalization theories explore the limitations of exporting and licensing from both explanatory and business perspectives. These theories identify with some precision how the relative profitability of foreign direct investment, exporting, and licensing vary with circumstances. Other theories help explain the direction of FDI. The internalization theories help explain why firms prefer FDI to licensing or exporting.?our firm manufactures a range of household goods and appliances. Over the years, your firm has developed proprietary processes, using environmentally-friendly chemicals that have given your firm a leadership position for “green” customers. Your products are competitively priced. The appliances and products you manufacture tend to be bulky and a bit heavy for their size.?ou are interested in exploring international business options. You need to decide whether exporting, licensing, or foreign direct investment strategies would be the most appropriate for your firm. You want to maintain your competitive advantages, so you consider different strategic options by answering the questions below.?.???he effect of bulky or heavy products on transportation costs can make _______ an inappropriate strategy.a.???licensingb.???oreign direct investmentc.???exporting?.???f your proprietary know-how of “green” processes is difficult to transfer to other firms, the most effective approach would bea.???exporting or foreign direct investment.b.???oreign direct investment or licensing.c.???licensing or exporting.?.???f your household goods can be efficiently produced through economies of scale, it would be a good idea to use a(n) _______ strategy.a.???exportingb.???oreign direct investmentc.???licensing?.???f consumers in different countries desire different product attributes, it would be best to engage in __________.a.???foreign direct investment.b.???icensing.c.???exporting. 24. If a firm’s know-how, skills, and capabilities can be protected by contract, and if tight controlover foreign operations is not vital to remain competitive, and there are reasons to believethat additional costs through transportation or tariffs would be high, the most effectiveapproach would be ________________.a.???exporting.b.???oreign direct investment.c.???licensing.?.???he emergence of single markets will make the business environment within each grouping less competitive.a.???Trueb.???alse?.???here is consensus that EU is what economists would call an optimal currency area.a.???Trueb.???alse?.???hile a nation as a whole may benefit significantly from a regional free trade agreement, certain groups within the country may lose.a.???Trueb.???alse?.???he European Parliament is the primary legislative body within the European Union.a.???Trueb.???alse?.???rade diversion occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.a.???Trueb.???alse?.???he movement toward regional economic integration has been most successful in Europe.a.???Trueb.???alse?.???n a free trade area, countries are not allowed to determine their own trade policies with nonmembers.a.???Trueb.???alse?ultiple Choice (1 pt/ea)?.???egional economic integration offers significant opportunities for businesses. Which of the following is one of these opportunities?a.???Over time, price differentials across nations will decline in a single market.b.???he business environment within each grouping has become more competitive.c.???There is a likely long-term improvement in the competitive position of many firms within the areas.d.???arkets that were formerly protected from foreign competition are increasingly open.?.???hat is the ultimate controlling authority within the EU because it has the power to turn legislation into law?a.???the European Councilb.???he European Commissionc.???the European Parliamentd.???he European Court of Justice?0.?ountry A and Country B entered into a free trade agreement recently. After this, Country A started importing heavy machinery from Country B, which Country A had previously produced domestically at a higher cost. Which of the following has occurred in this scenario?a.???trade creationb.???fficiency gainc.???trade deficitd.???rade diversion?1.?dentify the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements.a.???free trade areasb.???ustoms unionsc.???common marketsd.???conomic unions?2.?hich regional trade bloc includes Kenya, Uganda, and Tanzania?a.???EACb.???FTAc.???CAFTAd.???TAA?Fill in the blank (1 pt/ea)?3.?he emerging role of the ________ in competition policy suggests the EU is increasingly willing and able to intervene and impose conditions on companies proposing mergers and acquisitions.a.???European Parliamentb.???ourt of Justicec.???European Commissiond.???uropean Council?4.?he basic objective of ASEAN is to foster freer trade among member countries and to achieve cooperation in their industrial policies. The progress of ASEAN is best described as _________.a.???non-existent.b.???imited.c.???complete.d.???rogressive.?5.?nitially, the Andean Community struggled, but in the late 1980s, this trend started to reverse whena.???Brazil and Argentina agreed to reduce tariffs.b.???overnments of Latin America began to adopt free market economic policies.c.???the United States agreed to provide protection for intellectual property rights.d.???he majority of African countries agreed to a single currency.?6.?hen higher-cost external producers are replaced by lower-cost external producers within the free trade area, ________ occurs.a.???trade distortionb.???rade diversionc.???trade deficitd.???rade creation?7.?o achieve full economic union, the European Union introduced a common currency, the euro, controlled by a central EU bank. Although most member states have signed on, ________ remains an important holdout.a.???Great Britainb.???rancec.???Greeced.???weden?8.?ne of the impediments to integration arises from _____________________.a.???the fact that economic integration aids a minority.b.???oncerns that too many multinational firms will lose investors.c.???the fact that a nation as a whole typically does not benefit.d.???oncerns over national sovereignty.?9.?_______ can be seen as an attempt to achieve additional gains from the free flow of trade and investment between countries beyond those attainable under global agreements.a.???Foreign direct investmentb.???overnment interventionc.???Regional economic integrationd.???nrestricted trade?0.?he EU began as a ________, which eliminates trade barriers between member countries and adopts a common external trade policy, but does not allow free movement of factors of production between member nations.a.???common marketb.???ustoms unionc.???free trade aread.???olitical union?ead the case below and answer the questions that follow (Q. 21 – Q.25) (1 pt/ea)?ou are about to read a short case exploring Britain’s pending exit from the European Union (EU). The European Union is an example of regional economic integration. Britain has been a member of the trading bloc since 1973 but recently held a vote to determine whether to continue to be a part of the group. Despite a sharply divided public, Britain chose to exit the European Union and is now scheduled to break with the political and economic bloc in 2019.?n 2016, then British Prime Minister David Cameron announced a referendum that would allow British citizens to vote on whether Britain should continue to be part of the European Union or whether it should leave the trading bloc. Brexit, as the possible departure was called, quickly became a talking point throughout Europe and even in other countries such as the United States. Everyone from politicians to union leaders weighed in with their perspective of what Britain should do. Prime Minister Cameron was pushing for his country to remain in the European Union, but fellow Conservative party member Boris Johnson, the popular mayor of London, campaigned for the country to leave. U.S. leaders wanted Britain to remain a part of the European Union for political reasons as much as economic reasons, but some European Union members felt that Britain should leave. In the end, more Britons chose to leave than to remain.?he country is scheduled to formally break with the European Union in March 2019.?ritain entered the European Union in 1973, joining what was then a relatively small group of countries trying to establish a trading bloc that would, through free trade, be beneficial for all members. Over time, the level of integration among the European Union countries has increased. The Eurozone was created, and there has been distinct movement toward a unified banking system. The EU Charter of Fundamental Rights was signed, as was the Schengen Agreement to eliminate border controls.?ritain has not always embraced European Union policies and demands. The country opted out of the European Monetary System in 1978, and in 1992, it was forced out of the Exchange Rate Mechanism after it put its own interests ahead of those of the bloc. In 2002, Britain once again forged its own path, choosing to keep the pound as its currency, rather than adopt the euro. Similarly, David Cameron chose in 2011 to veto a fiscal compact designed to further integrate Eurozone members.?Some scholars and bureaucrats argue that without a significant overhaul, the European Union is nothing more than a glorified free trade zone. Others, however, argue that the basic premise for the European Union still remains. The Treaty of Maastricht and the Treaty of Lisbon marked movement beyond a purely economic alliance and toward greater political and fiscal union.?1.?n its current state, the European Union can best be characterized as being at which level of economic integration?a.???free trade areab.???ommon marketc.???economic?niond.???ustoms unione.???political union?2.?hat fundamental element of a political union is the European Union missing by Britain’s decision to opt out of provisions such as the EU?harter of Fundamental Rights, the Schengen Agreement, and the Eurozone?a.???the complete integration of trade and currency regulations for member and nonmember nationsb.???he identity of the country bloc as a singular decision-making entityc.???the automatic currency adjustment alternative used by the European Union’s Central Bankd.???he willingness of countries to give up sovereignty for the benefit of alle.???the ability to coordinate PPP across member nations?3.?he banking union and harmonized tax rules that have been adopted by Eurozone members are indicators of which level of economic integration?a.???free trade areab.???ustoms unionc.???financial uniond.???ommon markete.???political union?4.?he Treaty of Maastricht and the Treaty of Lisbon were indications of ____ within the European Union.a.???less economic structureb.???ncreased sovereignty for member countriesc.???greater political uniond.??? shift toward common external policiese.???a harmonized trade system?5.?hich of the following best explains why some think the European Union would be better off without Britain?a.???The geographic separation between Britain and the rest of the European Union countries makes it difficult to achieve consensus on European Union matters.b.???ritain’s failure to adopt the euro has led to gross trade imbalances that threaten the viability of economic union going forward.c.???Britain has been seen as taking a “me first” approach rather than a “what’s best for the whole” approach.d.???ritain’s lax labor regulations make it difficult to have a unified labor policy.e.???Companies don’t recognize Britain as being a full member of the European Union.?usinessBUS BUS370
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