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| Section | Objectives |
|---|---|
| Topic 1: Key Topics Across All Competencies | - Supply and Demand Shifts - Elastic vs. Inelastic Goods - International Trade Policies (Tariffs, Quotas) - Currency Appreciation and Depreciation - Foreign Direct Investment (FDI) Impacts - Global Business Strategies and Porter's Framework |
| Topic 2: Competency 1: International Trade and Currency Exchange | - Impact of Interest Rates on Financial Flows and Exchange Rates - Currency Exchange Rate Determination - Introduction to International Trade Theories |
| Topic 3: Competency 3: Economic Decision-Making by Firms and Customers | - Consumer Behavior (Budget Constraint, Indifference Curves) - Firm Behavior Under Different Market Structures (Perfect Competition, Monopoly, Oligopoly) |
| Topic 4: Competency 2: Political and Economic Forces | - Market Economy vs. Command Economy - Property Rights and the Rule of Law |
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NEW QUESTION # 82
What are examples of fixed costs? (Choose TWO.)
Answer: C,D
Explanation:
InGlobal Economics for Managers,fixed costsare costs that do not vary with the level of output in the short run, making optionsC and Dcorrect.
Option C, astate license fee, is fixed because it must be paid regardless of how much output is produced.
Option D,monthly internet service, is also fixed since the cost remains constant even if production rises or falls.
Options A, B, and E arevariable costsbecause they increase as output increases. Sales commissions depend on sales volume, flour usage depends on bread production, and parts costs rise with the number of devices produced.
Understanding fixed costs is essential for break-even analysis and short-run production decisions. Thus, C and D are correct.
NEW QUESTION # 83
Which mode of entry is an equity-based entry mode?
Answer: D
Explanation:
InGlobal Economics for Managers, entry modes are commonly classified intonon-equity,contractual, and equity-basedmodes, depending on the level of ownership, control, and risk assumed by the firm. A50/50 joint ventureis an equity-based entry mode, making option B the correct answer.
Equity-based entry modes involveownership of assets in the foreign market. In a 50/50 joint venture, two firms-typically one domestic and one foreign-each contribute capital and share ownership, control, profits, and risks equally. This structure allows firms to access local market knowledge, share financial risk, and comply with host-country regulations that may restrict full foreign ownership.
Option A, franchising, and option C, licensing, arecontractual entry modes. In these arrangements, firms transfer intellectual property or business formats to foreign partners without taking ownership stakes. While these modes involve lower risk and investment, they also provide less control. Option D, indirect exports, is a non-equity modethat requires minimal commitment and no foreign ownership.
Global Economics for Managersemphasizes that equity-based modes like joint ventures are often chosen when firms need local partners, face political or regulatory constraints, or operate in culturally or institutionally complex environments. However, they also involve higher risk due to shared control and potential partner conflicts.
Thus, option B correctly identifies an equity-based mode of entry.
NEW QUESTION # 84
What are represented by informal institutions?
Answer: C
Explanation:
Informal institutions are unwritten social constraints that shape behavior, including norms, customs, values, traditions, and ethics. Option B is correct because ethics represents an informal guide to behavior rather than a formally codified legal requirement. Informal institutions reduce uncertainty by helping people understand what is socially acceptable, trustworthy, or legitimate in a particular society. They matter greatly in global business because managers may comply with formal laws but still fail if they ignore local customs or ethical expectations. Rules and regulations are usually formal when written and enforced by legal authorities. Written laws are clearly formal institutions. Informal institutions are enforced mainly through social approval, reputation, relationships, and cultural expectations rather than courts or government penalties.
NEW QUESTION # 85
What is a characteristic of a market economy?
Answer: A
Explanation:
A market economy emphasizes private ownership of the factors of production and relies on decentralized decision making by consumers and firms. Option D is correct because private ownership is one of the defining features of market-based systems. In a market economy, prices are primarily determined by supply and demand rather than direct government planning. Firms decide what to produce based on profitability, and consumers decide what to buy based on preferences and income. Option B describes a command economy, where government has the primary authoritative role. Option C is also command-economy logic because supply, demand, and pricing are centrally planned. Option A is too broad and inaccurate because most real- world economies are mixed economies, not pure market economies.
NEW QUESTION # 86
When demand decreases and supply stays the same, what happens to the equilibrium point of price and quantity? (Choose TWO.)
Answer: A,C
Explanation:
InGlobal Economics for Managers, a decrease in demand with supply unchanged leads to alower equilibrium price and a lower equilibrium quantity, making options B and D correct.
A leftward shift of the demand curve creates excess supply at the original price. To eliminate the surplus, prices fall, and quantity exchanged decreases until a new equilibrium is reached.
Options A and C contradict standard supply-demand analysis.
Thus, B and D are correct.
NEW QUESTION # 87
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