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| Section | Objectives |
|---|---|
| Competency 2: Political and Economic Forces | - Market Economy vs. Command Economy - Property Rights and the Rule of Law |
| Key Topics Across All Competencies | - Elastic vs. Inelastic Goods - Currency Appreciation and Depreciation - Supply and Demand Shifts - Global Business Strategies and Porter's Framework - International Trade Policies (Tariffs, Quotas) - Foreign Direct Investment (FDI) Impacts |
| Competency 1: International Trade and Currency Exchange | - Impact of Interest Rates on Financial Flows and Exchange Rates - Introduction to International Trade Theories - Currency Exchange Rate Determination |
| Competency 3: Economic Decision-Making by Firms and Customers | - Firm Behavior Under Different Market Structures (Perfect Competition, Monopoly, Oligopoly) - Consumer Behavior (Budget Constraint, Indifference Curves) |
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NEW QUESTION # 46
What are characteristics of monopolistic competition? (Choose THREE.)
Answer: A,C,E
Explanation:
InGlobal Economics for Managers,monopolistic competitionis characterized bymany sellers,product differentiation, andfree entry and exit, making options A, B, and C correct.
Firms sell products that are similar but not identical, allowing them some degree of pricing power. Examples include restaurants, clothing brands, and personal services. Because entry is relatively easy, economic profits tend to be eliminated in the long run.
Options D and E describe monopoly or perfect competition, not monopolistic competition.
Thus, A, B, and C correctly describe monopolistic competition.
NEW QUESTION # 47
If the demand for a good is inelastic, what is true?
Answer: B
Explanation:
InGlobal Economics for Managers, demand isinelasticwhenquantity demanded responds only slightly to changes in price, making option B correct.
Inelastic demand is common for necessities, goods with few substitutes, or goods that represent a small portion of income. When demand is inelastic, price and total revenue move in the same direction.
Options A, C, and D describe elastic demand.
Thus, option B correctly defines inelastic demand.
NEW QUESTION # 48
Which company has a natural resource-seeking strategic goal?
Answer: A
Explanation:
In Global Economics for Managers , a natural resource-seeking strategy refers to firms that engage in foreign direct investment to access specific natural resources that are unavailable or costly in their home country. Option C correctly reflects this motive.
Companies in industries such as oil, gas, mining, agriculture, and timber often locate operations where resources are naturally abundant. The primary objective is to secure reliable and cost-effective access to essential inputs for production.
Option A describes a cost-seeking strategy, option B a market-seeking strategy, and option D a strategic asset- seeking strategy.
Thus, option C correctly identifies a natural resource-seeking strategic goal.
NEW QUESTION # 49
Which statement about Federal Reserve lending to banks is true?
Answer: B
Explanation:
InGlobal Economics for Managers, banks that borrow directly from the Federal Reserve through the discount windowpay the discount rate, making option D correct. The discount rate is the interest rate the Fed charges banks for short-term loans.
Option A is incorrect because Fed lending fluctuates based on economic conditions. Option B is incorrect because the discount rate can be changed at any time. Option C is incorrect because consumer interest rates are market-determined, not set at the discount rate.
Thus, option D accurately describes Fed lending.
NEW QUESTION # 50
Which mode of entry is an equity-based entry mode?
Answer: B
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 # 51
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