1. Customs brokers are government inspection officials who regulate the shipment of goods in and out of
the country.
ANS: F PTS: 1
2. Global sourcing is the term commonly used to describe the process by which a firm attempts to locate
and purchase goods or services on a worldwide basis.
ANS: T PTS: 1
3. Nontariff barriers have a significant influence on how firms make their trade and investment decisions.
ANS: T PTS: 1
4. The U.S.'s largest trading partner is Canada.
ANS: T PTS: 1
5. Small and medium-size companies have little to contribute to the international marketplace.
ANS: F PTS: 1
6. The U.S. has maintained a trade surplus in services.
ANS: T PTS: 1
7. Because they tend to be more insidious, nontariff barriers are generally a greater barrier to trade than
are tariff barriers.
ANS: T PTS: 1
8. Intellectual property rights are valuable assets that can be licensed for use to others through a
document collection international sales contract.
ANS: F PTS: 1
9. Trade consists of the import and export of goods or services.
11. The three forms of international business are exporting, importing, and licensing.
ANS: F PTS: 1
12. Comparative advantage exists if the costs of production and price received for the goods allow the
goods to be sold for a higher price in a foreign country than at home.
ANS: T PTS: 1
13. The premise that suggests nations should concentrate their efforts on producing those goods that they
can make most efficiently with minimal effort and waste is called comparative advantage.
ANS: F PTS: 1
14. Indirect exporters commonly employ the services of export trading companies and export management
companies.
ANS: T PTS: 1
15. Indirect exporting but not direct exporting involves sales through sales agents or to foreign
distributors.
ANS: F PTS: 1
16. International licensing agreements are contracts by which the holder of intellectual property grants
certain rights in that property to a foreign firm for a specified period of time.
ANS: T PTS: 1
17. A transfer of technology is governed by an international licensing agreement.
ANS: T PTS: 1
18. Foreign investment refers to the ownership and active control of ongoing business concerns.
ANS: T PTS: 1
19. A host country refers to the country under whose laws the investing corporation was created or is
headquartered.
21. Currency exchange risk cannot be managed because the fluctuations of currencies cannot be predicted.
ANS: F PTS: 1
22. Government seizure of foreign assets is an example of international law risk.
ANS: F PTS: 1
23. Information to research foreign countries, markets, and trade agents is limited.
ANS: F PTS: 1
24. Freight forwarders act as the buyer's or importer's agent.
ANS: F PTS: 1
25. Freight forwarders act as the seller's or exporter's agent.
ANS: T PTS: 1
MULTIPLE CHOICE
1. In Dayan v. McDonald's Corporation, the court ruled that:
a. McDonald's quality standards were inadequate under French law.
b. The McDonald's franchise contract was illegal under French law.
c. McDonald's had fulfilled its responsibility to the franchisee in France under U.S. law.
d. The French do not like hamburgers.
ANS: C PTS: 1
2. The type of risk that includes controls on exports, imports, controls on the movement of currency,
restrictions on licensing and investment, and controls over physical property located in a country is:
a. Legal risk.
b. Political risk.
c. Economic risk.
d. Currency risk.
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