C211 Global Economics for Managers Practice Questions - Set 4 - Part 1

Correct Answer: b) Trademark

A trademark provides firms with the exclusive legal right to use specific names, brands, and designs to distinguish their products from others in the market.

Correct Answer: b) A group of buyers and sellers of a particular good or service

A market in economics refers to the interaction of buyers and sellers engaging in the trade of a particular good or service.

Correct Answer: a) Intellectual property rights (IPR)

Intellectual property rights (IPR) refer to the legal rights granted to individuals and firms to protect and benefit from their intellectual property, such as patents, trademarks, and copyrights.

Correct Answer: c) Explicit and implicit costs

Total cost includes both explicit costs (which require actual cash outflows) and implicit costs (which represent opportunity costs that do not involve direct payment).

Correct Answer: b) Shortage

A shortage occurs when the quantity demanded of a good exceeds the quantity supplied, typically leading to upward pressure on prices.

Correct Answer: b) Vertical FDI

Vertical FDI occurs when a firm engages in different value chain stages, either upstream (such as raw material sourcing) or downstream (such as distribution), in a host country.

Correct Answer: c) Collusive price setting

Collusive price setting occurs when monopolists or firms engaged in collusion set prices at levels higher than the competitive market price, reducing competition.

Correct Answer: a) Cross-price elasticity of demand

Cross-price elasticity of demand measures how the quantity demanded of one good changes in response to a price change in a related good, such as a substitute or complement.

Correct Answer: c) As price increases, quantity supplied increases

The law of supply states that, assuming all other factors remain constant, an increase in price leads to an increase in the quantity supplied, and vice versa.

Correct Answer: b) Predatory pricing

Predatory pricing occurs when a firm intentionally sells goods at prices below cost to drive competitors out of the market, with the goal of later raising prices to recoup losses.

Correct Answer: a) First-mover advantage theory

First-mover advantage theory suggests that firms entering a market early can establish strong competitive positions, such as brand recognition and customer loyalty, that late entrants may not be able to achieve.

Correct Answer: c) Price elasticity of supply

Price elasticity of supply measures the responsiveness of the quantity supplied of a good to changes in its price.

Correct Answer: b) Discount rate

The discount rate is the interest rate charged by the Federal Reserve to banks for short-term loans, which influences overall interest rates in the economy.

Correct Answer: c) Strategic trade theory

Strategic trade theory posits that governments should provide support to key industries to help them gain international competitive advantages.

Correct Answer: b) Floating exchange rate policy

A floating exchange rate policy allows market forces, such as supply and demand, to determine the exchange rate of a currency without direct government intervention.

Correct Answer: b) Exporting

Exporting refers to the process of selling goods and services produced in one country to buyers in other countries.

Correct Answer: a) Antidumping duty

Antidumping duties are tariffs imposed on imports that are sold below cost with the intent to eliminate local competitors and gain market dominance.

Correct Answer: c) Democracy

Democracy is a political system in which citizens have the right to elect representatives to govern and make decisions on their behalf.

Correct Answer: c) Income elasticity of demand

Income elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in consumer income.

Correct Answer: b) Protectionism

Protectionism refers to government policies designed to reduce imports and promote the growth of domestic industries through measures such as tariffs and quotas.