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| Section | Weight | Objectives |
|---|---|---|
| Macroeconomics for Managers | 10% | - Economic Indicators and Policies
|
| Foundations of Global Economics | 20% | - Economic Systems and Institutions
|
| International Trade Theory and Policy | 25% | - Trade Policies and Barriers
|
| Global Finance and Monetary Systems | 25% | - Foreign Exchange Markets
|
| Foreign Direct Investment and Global Strategy | 20% | - Global Business Strategy
|
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NEW QUESTION # 130
What is the necessity of making sensible decisions in the absence of complete information called?
Answer: C
Explanation:
InGlobal Economics for Managers,bounded rationalitydescribes the necessity of making sensible decisions without complete information, making option B correct. Because information is costly, limited, or imperfect, individuals and firms cannot always make fully optimal decisions.
Bounded rationality recognizes cognitive limitations and time constraints. Managers often rely on rules of thumb, experience, and simplified models rather than exhaustive analysis. This approach leads to satisfactory decisions rather than perfectly optimal ones.
Option A assumes complete information, which is unrealistic. Options C and D describe information asymmetry problems, not decision-making constraints.
Thus, option B correctly defines bounded rationality.
NEW QUESTION # 131
What are three characteristics of industries primed for collusion? (Choose THREE.)
Answer: A,B,F
Explanation:
In Global Economics for Managers, industries that are primed for collusion typically possess structural features that make coordination among firms easier and more profitable. Three such characteristics are a small number of rivals, the presence of a price leader, and homogeneous products, making options A, B, and C correct.
A small number of rivals simplifies coordination. When only a few firms dominate a market, each firm can easily monitor competitors' actions and detect deviations from agreed-upon pricing or output levels. This increases the sustainability of collusive behavior.
A price leader often emerges in oligopolistic industries. One dominant firm sets prices, and others follow, reducing uncertainty and facilitating tacit collusion without explicit agreements. Price leadership helps firms avoid price wars while maintaining higher profits.
Homogeneous products further support collusion because firms compete primarily on price rather than product differentiation. When products are identical, undercutting prices becomes the main competitive tool, making collusion attractive as a way to stabilize prices and profits.
Options D, E, and F reduce the likelihood of collusion. Product differentiation weakens coordination, informed consumers intensify competition, and free entry undermines collusive agreements by attracting new competitors.
Thus, A, B, and C correctly identify characteristics of industries prone to collusion.
NEW QUESTION # 132
Which situation illustrates the proposition that when formal constraints are unclear or fail, informal constraints play a larger role in reducing uncertainty and providing constancy to firms?
Answer: C
Explanation:
InGlobal Economics for Managers, one core proposition of the institution-based view is thatwhen formal constraints are weak or unclear, informal constraints become more influential, making option D the correct illustration.
In option D, although local laws allow firms to bypass certain environmental safety standards, company leaders choose not to do so because ofdeep ethical values and social responsibility norms. These informal constraints-values, moral commitments, and corporate culture-guide behavior in the absence of strong formal enforcement.
Option A reflects rational economic decision making within clear formal rules. Option B illustrates response to formal policy change. Option C involves avoidance of formal rules rather than reliance on informal constraints.
Thus, option D best demonstrates how informal institutions substitute for weak formal institutions in guiding firm behavior.
NEW QUESTION # 133
In which situation is the contender strategy appropriate for responding to multinational enterprises (MNEs)?
Answer: B
Explanation:
InGlobal Economics for Managers, thecontender strategyis appropriate whenindustry pressure to globalize is high, but competitive assets are customized to home markets, making option B correct. This strategy is typically adopted by domestic firms facing strong competition from multinational enterprises (MNEs) in industries that are becoming increasingly global.
High pressure to globalize means that firms must compete on an international scale, often due to global customers, standardized products, or strong foreign competitors. However, when a firm's competitive assets- such as brand reputation, customer relationships, distribution networks, or regulatory knowledge-are deeply rooted in the home market, they are not easily transferable abroad. In this situation, the firm cannot immediately expand internationally without losing its competitive advantage.
Under a contender strategy, firms focus ondefending and strengthening their domestic positionwhile gradually upgrading capabilities to prepare for future global competition. This may involve improving efficiency, investing in technology, forming selective alliances, or learning from foreign competitors operating in the home market.
Option A describes conditions suitable for anextender strategy, where firms can leverage transferable assets internationally. Options C and D reflect low pressure to globalize and are more consistent with defender or dodger strategies rather than contender behavior.
Therefore, option B best captures the conditions under which the contender strategy is applied in response to MNE competition.
NEW QUESTION # 134
When demand decreases and supply stays the same, what happens to the equilibrium point of price and quantity? (Choose TWO.)
Answer: B,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 # 135
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