ECO100Y5 Lecture Notes - Lecture 7: Fixed Cost, Opportunity Cost, Variable Cost
ECO100Y5 Full Course Notes
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The primary costs of FDI to host countries are:
| Loss of sovereignty and patriotism | ||
| Adverse effects on competition and exports | ||
| Capital outflow | ||
| Loss of sovereignty, adverse effects on competition, and capital outflow |
____ suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services.
| The radical view | ||
| The free market view | ||
| Pragmatic nationalism | ||
| Expropriation |
What are the benefits of FDI to home countries?
| Repatriated earnings from profits from FDI. | ||
| Increased exports of components and services to host countries. | ||
| Learning via FDI from operations abroad. | ||
| All of these answers |
When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:
| Create knowledge spillover | ||
| Discover a new market for its goods | ||
| Overcome and combat market failure through FDI | ||
| Acquire location advantages or neutralize the first moverâs location advantages |
Most countries practice:
| Pragmatic nationalism | ||
| Free market based FDI | ||
| Government embracing radical view | ||
| French patriotism |
FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.
| True | ||
| False |
Most countries practice a totally "free market" view.
| True | ||
| False |
8. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in a foreign country, which will perform it on behalf of the local firm.
| True | ||
| False |
Financial, physical, and technological resources and capabilities are all tangible assets.
| True | ||
| False |
A firm's resources and capabilities are tangible assets a firm uses to choose and implement its strategies.
| True | ||
| False |
An example of low power distance would be when subordinates address their bosses on a first-name basis.
| True | ||
| False |
Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors.
| True | ||
| False |
A country with low-masculinity has a more subtle differentiation between the gender roles.
| True | ||
| False |
Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also called captive sourcing.
| True | ||
| False |
Managers in low uncertainty avoidance countries rely more on experience and training than managers in high uncertainty avoidance countries who rely more on rules.
| True | ||
| False |
Informal institutions include laws, regulations, and rules.
| True | ||
| False |
The United States is often classified as a collective society.
| True | ||
| False |
A pure market economy characterized by the "invisible hand" of market forces is noted by
| John Stuart Mill | ||
| Adam Smith | ||
| Aristotle | ||
| Amatya Zen |
Culture is defined in the text as:
| The communication between members of similar location. | ||
| The collective programming of the mind, which distinguishes the members of one group or category of people from another. | ||
| The main component of formal institutions. | ||
| The attitudes and behaviors characteristic of a particular social group or organization. |
When an expat employee returns to her or his current employer but the employer does not provide attractive opportunities, she/he often may be hired by a competitor firm. Why?
| Competitor firms are also interested in globalizing their business. | ||
| Former expats bring instant expertise and experience. | ||
| Competing firms will pay a higher premium for expertise. | ||
| All of these answers |
The government taking a "hands-off approach" is known as:
| Laissez faire | ||
| Command economy | ||
| Mixed economy | ||
| Liberal approach |
Expatriate managers make ideal candidates for top management positions.
| True | ||
| False |
____ are defined as rights associated with the ownership of intellectual property.
| Patents | ||
| Copyrights | ||
| Trademarks | ||
| Intellectual property rights |
In a collective society:
| Family units are highly valued. | ||
| Being an entrepreneur is a popular mindset | ||
| Being different than your neighbor is important. | ||
| Outsiders are easily trusted. |
Which of the following definitions best defines an expatriate manager?
| A manager who works outside his or her native country | ||
| A manager of great expertise | ||
| An ex-manager rehired for advisory purposes | ||
| None of these answers |
Question 3
According to Joseph Schumpeter, the theory of creative destruction describes a process by which
| A | some new products unleash a gale of destruction that drive other new products out of the market. | |
| B | new products unleash a gale of destruction that drives old products out of the market. | |
| C | new products are created by the destruction of capital. | |
| D | the creation of new products never involves the destruction of old products. |
Question 4
Which of the following countries had the highest GDP per capita in 2012?
| A Qatar | ||
| B | United States | |
| C | Japan | |
| D | Norway |
Question 5
________ save a ________ of their income. This ________ capital in their economy and raises economic growth.
| A | Developing countries; large proportion; decreases | |
| B | Developing countries; small proportion; increases | |
| C | High-income countries; large proportion; increases | |
| D | High-income countries; small proportion; increases |
Question 6
The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.
A
| A | government | |
| B | households | |
| C | banks | |
| D | firms |
Question 7
The U.S. economy has been more stable since 1950.
True
False
Question 8
When the economy reaches a trough in a business cycle, which of the following will occur?
| A | Income, production, and employment will continue to fall. | |
| B | Income, production, and employment will begin to rise. | |
| C | Income and production will rise, but employment will continue to fall. | |
| D | Employment rises, but income and production will continue to fall. |
Question 9
In a closed economy, what is the relationship between saving and investment?
| A | Saving is greater than investment. | |
| B | Investment is greater than saving. | |
| C | Investment is equal to saving. | |
| D | Investment may be greater or smaller than saving. |
Question 10
The per-worker production function shows the relationship between ________ per hour worked and ________ per hour worked, holding ________ constant.
| A | labor; real GDP; technology | |
| B | capital; real GDP; technology | |
| C | labor; capital; real GDP | |
| D | capital; labor; real GDP |
Question 11
New growth theory states that increases in ________ capital will result in ________ at the ________ level.
| A | knowledge; increasing returns to scale; firm | |
| B | physical; decreasing returns to scale; firm | |
| C | knowledge; decreasing returns to scale; economy | |
| D | knowledge; increasing returns to scale; economy |
Question 12
Which of the following is not a reason why the Industrial Revolution occurred when and where it did?
| A | The British government was committed to upholding private property rights. | |
| B | The British government was able to eliminate arbitrary increases in taxes. | |
| C | The British government was able to more easily seize wealth. | |
| D | Institutional changes by the British government helped protect wealth. |
Question 13
Growth in real GDP per capita for the world economy was greatest during
| A | the seventeenth century. | |
| B | the eighteenth century. | |
| C | the nineteenth century. | |
| D | the twentieth century. |
Question 14
Which of the following is a normative statement about economic growth?
| A | Economic growth is associated with higher labor productivity growth. | |
| B | Economic growth increases GDP per capita. | |
| C | Economic growth hurts developing countries. | |
| D | Foreign direct investment stimulates economic growth. |
Question 15
The effect of a recession on a company like Whirlpool Corporation is such that
| A | sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. | |
| B | profits fall less sharply as compared to firms that do not produce durable goods. | |
| C | the decline in sales is more short-lived as compared to firms that do not produce durable goods. | |
| D | there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. |
Question 16
For the recessions in the United States since the 1950s,
| A | cyclical unemployment has been non-existent. | |
| B | unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. | |
| C | unemployment falls on average by 2 percentage points 12 months after a recession begins. | |
| D | unemployment rises on average about 5 percentage points 12 months after a recession begins. |
Question 17
You are an economic advisor to the president. You are asked to recommend a policy to promote long-term economic growth in the economy. Which of the following policies would you choose?
| A | a reduction in sales taxes | |
| B | an investment tax credit | |
| C | a reduction in taxes on luxury yachts | |
| D | All of these |
Question 18
In comparison to a government that runs a balanced budget, when the government runs a budget deficit,
| A | the equilibrium interest rate will fall. | |
| B | business investment will fall. | |
| C | household savings will fall. | |
| D | None of these |
Question 19
If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined.
| A | labor force participation | |
| B | the quantity of goods or services that can be produced by one hour of work | |
| C | the working-age population | |
| D | nominal GDP |
Question 20
Policies to promote growth by increasing saving and investment work through
| A | decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. | |
| B | increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital. | |
| C | increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital. | |
| D | increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. |