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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Macroeconomics for Managers | 10% | - Economic Indicators and Policies
|
| Topic 2: International Trade Theory and Policy | 25% | - Classical and Modern Trade Theories
|
| Topic 3: Global Finance and Monetary Systems | 25% | - Balance of Payments and International Monetary System
|
| Topic 4: Foundations of Global Economics | 20% | - Views on Globalization
|
| Topic 5: Foreign Direct Investment and Global Strategy | 20% | - Global Business Strategy
|
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NEW QUESTION # 62
What does the term resource mobility describe?
Answer: D
Explanation:
InGlobal Economics for Managers,resource mobilityrefers tothe assumption that a resource removed from one industry can be moved to another, making option B the correct answer. Resource mobility is a core microeconomic concept that explains how factors of production-such as labor, capital, and land-can be reallocated across different uses in response to changes in economic conditions.
This concept is especially important in both domestic and international trade analysis. When trade patterns change due to globalization, technological progress, or policy shifts, some industries expand while others contract. Resource mobility determines how easily workers, machines, and capital can shift from declining industries to growing ones. High resource mobility allows an economy to adjust efficiently, minimizing long- term unemployment and production losses.
Option A describesfree trade ideology, not resource mobility. Option C defines atrade surplus, which relates to a country's balance of trade rather than factor movement. Option D reflectsprotectionism, a policy stance that restricts trade and is unrelated to the movement of resources between industries.
Global Economics for Managershighlights that resource mobility is often assumed in economic models to simplify analysis, but in reality, mobility can be limited. Skills may not transfer easily across industries, capital may be industry-specific, and geographic or institutional barriers can slow adjustment. These limitations explain why trade liberalization can create short-run adjustment costs even when long-run gains are positive.
For managers, understanding resource mobility is critical when making strategic decisions about investment, workforce planning, and location. Firms operating in dynamic global markets benefit when resources can be redeployed quickly in response to price signals and competitive pressures. Therefore, option B precisely captures the meaning and importance of resource mobility within microeconomic and macroeconomic principles.
NEW QUESTION # 63
What is the profit maximization condition for a monopoly?
Answer: B
Explanation:
InGlobal Economics for Managers, the profit-maximizing condition forall firms, including monopolies, is whenmarginal revenue (MR) equals marginal cost (MC), making option B correct.
A monopolist faces a downward-sloping demand curve, meaning that to sell more output, it must lower price.
As a result, marginal revenue is less than price. The firm maximizes profit by producing the quantity where the additional revenue from the last unit sold equals the additional cost of producing it.
Option A applies toperfect competition, not monopoly. Option C focuses on revenue rather than profit.
Option D has no economic meaning for profit maximization.
Thus, option B is correct.
NEW QUESTION # 64
When is it best for a firm to increase production?
Answer: B
Explanation:
InGlobal Economics for Managers, the fundamental profit-maximization rule states that firms shouldincrease production when marginal revenue exceeds marginal cost, making option C correct.
Marginal revenue represents the additional revenue from selling one more unit, while marginal cost represents the additional cost of producing it. As long as MR > MC, producing additional units increases profit. Firms should stop expanding output when MR = MC.
Option A implies losses on additional units. Option B relates to cost efficiency, not profit maximization.
Option D ignores costs and therefore does not maximize profit.
Therefore, option C correctly identifies the condition under which firms should increase production.
NEW QUESTION # 65
Which mode of entry is an equity-based entry mode?
Answer: B
Explanation:
In Global Economics for Managers , entry modes are commonly classified into non-equity , contractual , and equity-based modes, depending on the level of ownership, control, and risk assumed by the firm. A 50
/50 joint venture is an equity-based entry mode, making option B the correct answer.
Equity-based entry modes involve ownership 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, are contractual 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 mode that requires minimal commitment and no foreign ownership.
Global Economics for Managers emphasizes 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 # 66
When producing a piece of luggage, the marginal cost is $92 and the marginal revenue is $81. What is the best action for the firm?
Answer: A
Explanation:
According toGlobal Economics for Managers, whenmarginal cost exceeds marginal revenue, firms should decrease production, making option D correct.
In this case, MC = $92 and MR = $81. Producing an additional unit would reduce profit because the cost of production exceeds the revenue gained. Reducing output moves the firm closer to the profit-maximizing condition where MR equals MC.
Options A, B, and C would worsen losses or ignore marginal decision-making principles.
Therefore, option D is the correct managerial response.
NEW QUESTION # 67
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