WGU C211 Questions with Complete Solutions 2023

WGU C211 Questions with Complete Solutions 2023 view that claims phenomenon of globalization was initially driven by the desire of Western economies to exploit their power through MNE's new view that claims globalization is a long-run historical evolution since the dawn of humanity. Says it is nothing new and that it will always exist evolutionary view that claims globalization is swinging from one extreme to another from time to time pendulum investment in, controlling, and managing value-added activities in other countries foreign direct investment political view hostile to FDI. believes it is an instrument of imperialism and vehicle for exploitation of domestic resources by foreign capitalists and firms radical suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods and services free market views FDI as having pros and cons and only approving FDI when its benefits outweigh costs pragmatic nationalis what benefits exist to a country receiving FDI? capital inflow, technology spillovers, advanced management know-how, creates jobs what costs exist to a country receiving FDI? loss of sovereignty, adverse effects on competition, net outflow in the capital account The aggregation of importing and exporting that leads to the country-level trade surplus or deficit. balance of trade firms with a _____ degree of resource similarity are likely to have similar competitive actions high a high degree of resource similarity but low market commonality = _______ intensity of rivalry highest little resource similarity but high market commonality = _____ intensity of rivalry lowest mercantilism, absolute advantage and comparative advantage belong to what theory of international trade classical theory of international trade that relies on more realistic product life cycles and first mover advantages modern under free trade, a nation gains by specializing in economic activities in which it has _____advantage absolute focuses on the idea that if a country does not have absolute advantage, they can still choose to specialize in the production of one good where it has ______ advantage comparative comparative advantage and absolute advantage stem from factor endowments theory that the wealth of the world is fixed and that a nation that imports more and exports less will be richer mercantilism stage of the product life cycle where production of a new product that commands a price premium will concentrate in the US new stage of the product life cycle where demand and ability to produce grow in other developed nations maturing stage of the product life cycle where the previously new product is commoditized and production will now move to low-cost developing nations standardized comparative advantage may change over time because patterns of ______ change over time trade theory that suggests that intervention by governments in certain industries can enhance their odds for international success strategic trade if a company seeks to limit foreign exchange rate exposure in the forward direction, what is the most effective way to do this? currency hedging exchange rate risk associating with the time delay between entering a contract and settling it transaction risk forward transaction that protects traders and investors from exposure to fluctuations of the spot rate hedging a means of spreading out activities in different currency zones in order to offset the currency losses in certain regions through gains in other regions strategic heding amount of resources committed to entering a foreign market scale of entry how do institutions reduce uncertainty? by signaling which conduct is legit and which is not pillar of formal institution, coercive power of government regulatory pillar of informal institution, the mechanism through which norms influence individual and firm behavior normative pillar of informal institution, taken for granted values and beliefs that guide behavior cognitive institutions represented by laws, regulations and rules formal institutions represented by norms, culture and ethics informal the necessity of making rational decisions in the absence of complete information bounded rationality bounded rationality is a position in which view of global business institution political system that affects global business with an individuals right to freedom of expression and organization democracy political system that affects global business with hostility towards business, higher political risk such as nationalism totalitarianism political system where citizens elect representatives to govern the country on their behalf democracy political system where one person or party exercises absolute political control over the population totalitarianism law that uses comprehensive statutes and codes as a primary means to form legal judgements civil law that is shaped by precedents and traditions from previous judicial decisions common law that is based on religious teachings theocratic less confrontational, shorter, less specific form of law civil common law is ______ flexible than civil law more the legal right to use an economic resource and to derive income and benefits from it property right legal rights awarded by government authorities to investors of new products or processes who are given monopoly rights to derive income from inventions patent exclusive legal rights of authors and publishers to publish and disseminate their work copyright exclusive legal rights of firms to use specific names, brands and designs to differentiate their products trademark characterized by the invisible hand of market forces where the government takes a hands off approach market factors of production should be government owned or state owned and all supply, demand and pricing are planned by the government command the economic system of most countries mixed economy a curve that represents a consumers preferences indifference curve ________ indifference curves are preferred to ______ ones higher, lower indifference curves are bowed ______ inward the rate at which a consumer is willing to substitute one good for another marginal rate of substitution the limit on consumption bundles that a consumer can afford budget constraint a piece of analysis that shows the combination of goods the consumer can afford given their income and price of goods budget constraint an increase in income will shift the budget constraint ________ outward the slope of the indifference curve equals the slope of the budget constraint the consumer chooses consumption of the two goods so that the marginal rate of substitution equals the relative price the increase in total cost that results from adding an additional unit of production marginal cost formula to calculate marginal cost change in total cost / change in quantity a firm will produce the quantity where MR = MC as long as ________ price AVC when price falls below the AVC, what will a firm do? shut down temporarily someone who has to take the market price of a product and accept it as their own price price taker the demand curve for a perfectly competitive firm is horizontal the demand curve for a monopolistic market is downward sloping where do firms with market power determine the quantity of product/service they will produce? quantity where MR = MC, quantity where P = MC where will firms with price setting capacity maximize profits? intersection between the marginal cost curve and the marginal revenue curve a market with only a few sellers offering similar or identical products oligopoly a firm is a sole seller of a product with no close substitutes monopoly many firms sell similar products but not identical. many firms compete for the same customers, free entry and exit monopolistic competition many buyers and sellers, identical products, free entry and exit, perfect information, price taker perfectly competitive what may rare, precious, and hard-to-duplicate resources and capabilities lead to for a firm? sustained comparative advantage company strategies must consider actions by rival firms is a lesson learned from what prisoners dilemma about oligopoly what prevents oligopolistic firms from behaving like monopolies? antitrust laws oligopolies are best off when producing a ______ quantity of output and charging a price ______ marginal cost small, above decrease in income _______ demand for normal goods decreases decrease in income ______ demand for inferior goods increases increase in income _____ demand for inferior goods decreases increase in income ______ demand for normal goods increases good in which people will purchase more of as their income increases normal good good in which people will purchase less of as their income increases inferior good coke and pepsi are examples of substitutes hot dogs and hot dog buns are examples of complements normal and inferior goods, complements and substitutes, expectations about the future and tastes and number of buyers influence the position of the demand curve demand that is greater than one elastic demand that is less than one inelastic how is income elasticity measured? percentage change in quantity demanded / percentage change in income a change in price will cause a large change in the quantity demanded elastic a change in price will not cause a large change in the quantity demanded inelastic the percentage change in price is equal to the percentage change in quantity demanded unit-elastic necessities have a _____ income elasticity small luxuries have a ______ income elasticity large how the quantity demanded of one good changes in response to a change in the price of another good cross-price elasticity substitute goods have a ______ cross elasticity positive complementary goods have a _____ cross elasticity negative price elasticity of demand equation % change in quantity demanded / % change in price income elasticity of demand equation % change in quantity demanded / % change in income cross elasticity of demand equation % change in quantity demanded of Y / % change in price of X tools the federal reserve has in regards to monetary control open market operations, discount rates, reserve ratios purchase or sale of US treasury or US government bonds in the open market open market operations when the fed buys bonds, what happens to the money supply and AD? increases money supply and shifts AD to the right when the fed sells bonds, what happens to the money supply and AD? decreases money supply and shifts AD to the left the interest rate on loans that the Fed makes to the bank discount rate reducing the discount rate does what? increases money supply, increases AD increasing the discount rate does what? decreases money supply, decreases AD ratio of money that banks are required to hold whenever an entity deposits money with them reserve ratio when the reserve ratio is increased, what happens to the money supply and AD decreases, shifts to the left when the reserve ratio is decreased, what happens to the money supply and AD increases, shifts to the right if the government uses fiscal policy and cuts taxes, what effect will this have on interest rates and AD? cutting taxes will increase demand for money, increase interest rates and cause AD to shift to the right the difference between what a buyer is willing to pay for a good or service and what they actually pay consumer surplus consumer surplus is measured in the area _____ the demand curve, _______ the price, _______ the quantity consumed under DC, above price, up to quantity consumed the benefit sellers receive from participating in a market producer surplus producer surplus is measured in the area ______ the supply curve, _____ the price, ______ the quantity supplied above, below price, up to total surplus equation value to buyers - cost to sellers the study of economy wide phenomena such as inflation, unemployment and economic growth macroeconomics the study of how households and firms make decisions and how they interact in markets microeconomics income must _______ expenditure in an economy equal the market value of all final goods and services produced within the border of a given country during a specified period of time gross domestic product gross domestic product measures what two things? total amount of expenditures and total income of everyone in the economy 4 components of GDP 1. consumption 2. investment 3. government purchases 4. net exports (exports minus imports) which payments are not counted in government expenditures? transfer payments, social security a tax on goods produced abroad and sold domestically tariff a method used to restrict international trade by taxing imported goods tariff the fall in total surplus that results from a tax deadweight loss financial environment in which exchange rates and payments for goods and services are conducted international monetary system what happens to a country's real exchange rate and nominal interest rate as the price level increases exchange rates depreciate, interest rates increase easiest method non financial companies use to handle currency fluctuations currency diversification strategy that minimizes the risk of unanticipated changes in future exchange rates currency swap a non equity arrangement for a company contemplating entry into a foreign market licensing What size commitment is required for a non-equity mode of entry into a foreign market? small two supportive pillars of an informal institution normative and cognitive reducing uncertainty is the key role of an institution according to which view institution based view the rules, enforcement mechanisms, and organizations that support market transactions are referred to as _____. institutions two polar types of economies centrally planned and market in addition to improving efficiency, why might a government intervene in a market? to promote equality what is the relationship between marginal cost and total cost? marginal cost is the change in total cost divided by the change in quantity a seller maximize profits in a perfectly competitive market by producing the quantity where P = MC the economic profit of a competitive firm is the difference between _______ and _______ total revenue and total cost when average variable costs are above the price, what should a firm do? temporarily shut down what is the producers demand curve when the producer sells a differentiated product? downward sloping a competitive firms demand curve is ______ elastic than a monopoly's demand curve more at which point does a monopoly maximize profit? where MC = MR many firms and differentiated products monopolistic competition if the consumers budget constraint has shifted inwards, the consumer will buy ______ normal goods and ______ inferior goods fewer normal goods and more inferior goods if there is an increase in market demand in a perfectly competitive market, equilibrium price will ______ and equilibrium quantity will ______ they will both increase if both demand and supply decrease, what will happen to equilibrium price and quantity? quantity will decrease, but price can either increase or decrease