Business in the International Economy
ECO8060: Business in the International Economy
Assignment 1
Name: Tabassum Ansari
Student Id: 0000599937
Part A:
1. Demand sensitivity depends on all of the following except
Ans. The sensitivity of a Firm’s output to changes in its price.
2. Which of the following is true if the total variable cost curve is rising
Ans. Marginal cost is increasing.
3. In exhibit 1 below, when the price is $5, the firm:
Ans. should produce output equal to 7
4. The most recent phase of globalization is charactized by which of the following?
Ans. Enormous growth of cross-border trade and investment.
5. Many firms have successfully lowered trade and investment barriers by
Ans. Petitioning the World Trade Organization.
6. Which of the following most supports Country A and Country B becoming an economic bloc?
Ans. Geographic proximity to each other.
7. All of the following are typical characteristics of emerging markets except
Ans. Low inward foreign direct investment.
8. If last year one dollar equalled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely not occur?
Ans. European firms lower their prices on goods made with U.S. parts.
9. When firm managers research the external business environment of a potential market they most likely examine all of the following except
Ans. Human resources.
10. All of the following are advantages that firms often experience through exporting except.
Ans. Amplified country and corporate risk.
Part B:
In what way was Ricardo’s Law of Comparative Advantage superior to Smith’s theory of absolute advantage? How do gains from trade arise with comparative advantage? How can a nation that is less efficient than another nation in the production of all commodities export anything to second nation?
Trade between two countries has been going on since early days and economists have given logical explanation for international trade and investment. They have written theories
Assignment 1
Name: Tabassum Ansari
Student Id: 0000599937
Part A:
1. Demand sensitivity depends on all of the following except
Ans. The sensitivity of a Firm’s output to changes in its price.
2. Which of the following is true if the total variable cost curve is rising
Ans. Marginal cost is increasing.
3. In exhibit 1 below, when the price is $5, the firm:
Ans. should produce output equal to 7
4. The most recent phase of globalization is charactized by which of the following?
Ans. Enormous growth of cross-border trade and investment.
5. Many firms have successfully lowered trade and investment barriers by
Ans. Petitioning the World Trade Organization.
6. Which of the following most supports Country A and Country B becoming an economic bloc?
Ans. Geographic proximity to each other.
7. All of the following are typical characteristics of emerging markets except
Ans. Low inward foreign direct investment.
8. If last year one dollar equalled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely not occur?
Ans. European firms lower their prices on goods made with U.S. parts.
9. When firm managers research the external business environment of a potential market they most likely examine all of the following except
Ans. Human resources.
10. All of the following are advantages that firms often experience through exporting except.
Ans. Amplified country and corporate risk.
Part B:
In what way was Ricardo’s Law of Comparative Advantage superior to Smith’s theory of absolute advantage? How do gains from trade arise with comparative advantage? How can a nation that is less efficient than another nation in the production of all commodities export anything to second nation?
Trade between two countries has been going on since early days and economists have given logical explanation for international trade and investment. They have written theories
References: N Gregory Mankiw, 2008 Principles in Macroeconomics, 5th Edition, Cengage Learning, USA. Cavusgil, S. Tamer, Knight, G and Riesenberger, JR 2008, International Business: Strategy, Management and the New Realties, 1st edition, Prentice Hall, New Jersey. http://www.amazon.com/Economics-Principles-Action-OSullivan/dp/0130630853. Retrieved May 3, 2009. http://www.bls.gov/bls/glossary.htm. http://www.economyprofessor.com/economictheories/comparative-advantage-theory.php. http://www.springerlink.com/index/P351M31503V3XP12.pdf