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Questions
Q:
Which of the following statements is correct?
a. If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate.
b. The present value of a future sum increases as the simple interest rate increases or the number of discount periods per year decreases.
c. The present value of a future sum increases as either the simple interest rate or the number of discount periods per year increases.
d. The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases.
e. All of the above statements are false.
Q:
Discuss the Export Trading Company (ETC) Act and its effects on U.S. firms.
Q:
Along an indifference curve,A) the marginal utility of all items is equal. B) the total satisfaction is the same.C) the prices of all goods are equal.D) the marginal utility/price ratios of all items are equal.
Q:
Supposed someone offered you the choice of two equally risky annuities, each paying $10,000 per year for five years. One is an ordinary (or deferred) annuity, the other is an annuity due. Which of the following statements is most correct?
a. The present value of the ordinary annuity must exceed the present value of the annuity due, but the future value of an ordinary annuity may be less than the future value of the annuity due.
b. The present value of the annuity due exceeds the present value of the ordinary annuity, while the future value of the ordinary annuity.
c. The present value of the annuity due exceeds the present value of the ordinary annuity, and the future value of the annuity due also exceeds the future value of the ordinary annuity.
d. If interest rates increase, the difference between the present value of the ordinary annuity and the present value of the annuity due remains the same.
e. Both answers a and d are correct.
Q:
How does complementary marketing extend a company's distribution? When is a company most likely to use it?
Q:
Suppose someone offered you your choice of two equally risky annuities, each paying $5,000 per year for 5 years. One is an annuity due, while the other is a regular (or deferred) annuity. If you are a rational wealth-maximizing investor which annuity would you choose?
a. The annuity due.
b. The deferred annuity.
c. Either one, because as the problem is set up, they have the same present value.
d. Without information about the appropriate interest rate, we cannot find the values of the two annuities; hence we cannot tell which is better.
e. The annuity due; however, if the payments on both were doubled to $10,000, the deferred annuity would be preferred.
Q:
If marginal utility is positive but diminishing, thenA) average utility must be negative.B) marginal utility must be above-average utility. C) total utility must be positive.D) marginal utility must be more than total utility.
Q:
What are the main features of export management companies? Describe their advantages and disadvantages.
Q:
Which of the following statements is correct?
a. The PV of an ordinary annuity will be larger than the PV of an annuity due, other things held constant.
b. The effective annual rate will always be greater than the simple rate except in situations where the periodic rate is equal to the simple rate.
c. If you were borrowing money from a bank, and the simple interest rate was 10 percent, you would be better off if the bank used daily rather than quarterly compounding.
d. If you were borrowing money from a bank, and the simple interest rate was 10 percent, daily compounding, you would be better off if the bank used a 365-day year rather than a 360-day year.
e. $100 placed in a bank account which pays 6 percent will double faster if the bank pays interest annually rather than daily.
Q:
The longer any price change lasts over time, theA) more difficult it is to alter quantity demanded.B) the more quickly quantity demanded will return to its original level.C) the longer the short-run equilibrium will continue to be the short-run equilibrium. D) more quantity demanded will change.
Q:
The Japanese distribution structure has four distinguishing features. Discuss these and explain how they impact Japan's market.
Q:
Which of the following statements is false?
a. If the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the present value of the same series.
b. To increase present consumption beyond present income normally requires either the payment of interest or else an opportunity cost of interest foregone.
c. Disregarding risk, if money has time value, it is impossible for the present value of a given sum to be greater than its future value.
d. Disregarding risk, if the present value of a sum is equal to its future value, either r = 0 or t = 0.
e. Each of the above statements is true.
Q:
The marginal cost of pollution abatement is represented byA) an upward sloping curve. B) a downward sloping curve.C) a horizontal curve. D) a vertical curve.
Q:
What happens in an import-oriented distribution structure? How are intermediaries affected?
Q:
As the discount rate increases without limit, the present value of the future cash inflows
a. Gets larger without limit.
b. Stays unchanged.
c. Approaches zero.
d. Gets smaller without limit, i.e., approaches minus infinity.
e. Goes to ern.
Q:
Relative poverty refers to
A) how a familyʹs income compares to the incomes of those around them.
B) poverty levels at a stated income cutoff.
C) the number of poor in one state relative to another.
D) None of the above.
Q:
One result of the EU's unification is
A) the elimination of trade barriers with countries outside the EU.
B) the acceptance of universal prices on basic goods.
C) the elimination of transportation barriers among member countries.
D) an increase in the number of warehouses in member countries.
E) elimination of the need for cargo ships for distribution.
Q:
You have determined the profitability of a planned project by finding the present value of all the cash flows form that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?
a. The discount rate decreases.
b. The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same.
c. The discount rate increases.
d. Answers b and c above.
e. Answers a and b above.
Q:
For a monopsonist the marginal cost of increasing its workforce will always be greater than the wage rate becauseA) there is not good factor substitution in a monopsony.B) the wage rate offered the newest employee must be paid to all workers.C) the industry will be a closed shop.D) a normal rate of return must be paid to the owner.
Q:
Cargo ships are reducing transit time and are larger and thus able to carry more containers. What is a disadvantage of this for U.S. companies' imports?
A) They are taking business away from other forms of transit.
B) Some ships are too large to fit into U.S. ports.
C) The cost is becoming prohibitive.
D) Containers cannot be shipped by rail in Europe.
E) They have impeded investment in supersonic passenger jets.
Q:
Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will
a. Be higher.
b. Be lower.
c. Stay the same.
d. Cannot tell.
e. Be variable.
Q:
Which of the following correctly describes the trend in U.S. union membership?A) Union membership has been decreasing steadily since the 1930s.B) Union membership decreased from 1930 - 1960, but has been increasing steadily since. C) Union membership peaked in the 1960s and has been decreasing steadily since.D) Union membership declined until the 1980s, but has been increasing steadily since.
Q:
A website and the product must be culturally neutral, which can be a problem when it comes to color. For instance, the color red is associated with socialism in
A) the United States.
B) China.
C) Brazil.
D) Uruguay.
E) Spain.
Q:
The additional cost associated with hiring one additional unit of some factor input, such as labor, is referred to asA) marginal physical product of labor. B) marginal revenue cost.C) marginal factor cost. D) marginal revenue product.
Q:
The present value of $3,000 to be received in 5 years at a 10% discount rate is $2000.
a. True
b. False
Q:
E-commerce is a form of ________ selling.
A) direct
B) parallel
C) dual
D) indirect
E) targeted
Q:
Perpetuities represent a series of even cash flows over a finite period of time.
a. True
b. False
Q:
A website should be seen as
A) a sole means of advertising.
B) a vehicle for product delivery.
C) a substitute for marketing in more than one language.
D) a way to get around differences in cultures.
E) a means of promotion and a retail store.
Q:
The hypothesis that regulators eventually adopt policies that benefit the producers in the industry is known as theA) capture hypothesis.B) producersʹ hypothesis.C) share-the-gains, share-the-pains hypothesis. D) itʹs-a-rip-off hypothesis.
Q:
The present value of a future cash flow is the amount of money if invested today at particular interest would turn into the future value at maturity.
a. True
b. False
Q:
When developing a website, what is true about the use of language?
A) English should be used, as it is the most universal language.
B) It is not necessary to use multiple languages because the customer will bridge the language gap.
C) Simple translation of web pages is sufficient to reach foreign markets.
D) Language and culture do not impact a website's message in any significant way.
E) A country-specific (and language-specific) website may make the difference between success and failure.
Q:
Jane purchases snickle-dees only because her friends do. This isA) price-leadership. B) negative-sum game.C) positive market feedback. D) negative market feedback.
Q:
E-commerce is more developed in ________ than the rest of the world, partly because of the lower cost of access to the Internet than found elsewhere.
A) China
B) Brazil
C) Switzerland
D) Japan
E) the United States
Q:
The savings rate of individuals in the U.S. has trended higher since the 1980s and it is now higher than the savings rate of most other developed countries.
a. True
b. False
Q:
If a firm that produces an information product uses marginal cost pricing, then the firmA) will earn negative profits.B) will earn profits equal to zero.C) will earn positive profits but could earn a higher profit by using a different method. D) will maximize profits.
Q:
Parallel importing is also known as
A) secondary wholesaling.
B) black marketing.
C) backwashing.
D) industrial piracy.
E) smuggling.
Q:
The future value of a cash flow is positively related to interest rate and negatively related to the amount of time until maturity.
a. True
b. False
Q:
In general, the demand for the product of a monopolistic competitor isA) unitary elastic. B) relatively inelastic.C) relatively elastic. D) perfectly elastic.
Q:
The effective annual rate of 5% compounded monthly is approximately 5.12%.
a. True
b. False
Q:
Abel Corp. is a wholesaler for Global Electric in the French market. Global Electric discovered that Abel Corp. was diverting some of its goods to the English market. Abel could get a greater profit in the English market because the goods were bought by the firm at a cheaper price in France. What is Abel engaged in?
A) black marketing
B) parallel importing
C) backwashing
D) industrial piracy
E) smuggling
Q:
Suppose a monopolistʹs costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm shouldA) increase output and decrease price. B) decrease output and increase price.C) not change output or price. D) shut down.
Q:
The closer the company wants to get to the customer in its channel contact,
A) the larger the sales force required.
B) the more routine the channel-building process becomes.
C) the more likely the company will use middlemen.
D) the more important it is to consult with trade organizations.
E) the more effective use of the Internet will be.
Q:
The post-audit is a simple process in which actual results are compared to forecasted results and any discrepancy indicates a change factors that are completely under management's control.
a. True
b. False
Q:
Signals areA) used by economic decision -makers to inform others about their plans.B) the method by which government planners inform economic decision -makers about the types of decisions they should make.C) the method by which firms determine their profit maximizing quantity.D) compact ways of conveying to economic decision makers information needed to identify industries where more resources are needed.
Q:
According to experienced exporters, what is the only effective way to select a middleman?
A) Conduct a background check on all the distributors available in the target market.
B) Issue a request-for-proposal to all distributors in the target market and evaluate their responses.
C) Consult other manufacturers of similar products and select the distributor recommended by them.
D) Consult trade organizations and select the distributor recommended by them.
E) Talk personally to ultimate consumers to find whom they consider to be the best distributors.
Q:
The post-audit two main purposes are to improve forecasts and to improve operations.
a. True
b. False
Q:
TotalOutputTotalCostsTotalOutputTotalCosts100$500106$528101501107540102503108555103506109580104510110615105518111660Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10/unit. What is true when the firm produces 103 units?A) Total revenue equals $5,060.B) Total costs exceed total revenue by $403.C) Marginal revenue is less than marginal cost. D) Its total profit is $524.
Q:
Sixty percent of the Japanese population lives in the ________ market area, which essentially functions as one massive city.
A) TokyoNagoyaOsaka
B) KomakiTokonameKariya
C) NagoyaHandaSeto
D) NishioOkazakiInazawa
E) InuyamaNisshinTakahama
Q:
There exists an IRR solution for each time the direction of cash flows associated with a project is interrupted.
a. True
b. False
Q:
Refer to the above figure. Marginal costs are represented by curveA) 1. B) 2. C) 3. D) 4.
Q:
Which action should be taken when beginning the search for prospective middlemen?
A) short-listing the middlemen
B) studying the target market
C) evaluating the available financial resources
D) designing the sales force required
E) understanding the mission of the manufacturing firm
Q:
The NPV method implicitly assumes that the rate at which cash flows can be reinvested is the required rate of return, whereas the IRR method implies that the firm has the opportunity to reinvest at the project's IRR.
a. True
b. False
Q:
A long-term loan that is given to a firm is known as aA) share of stock. B) bond. C) dividend. D) random walk.
Q:
What subject area should be on the checklist of criteria for evaluating middlemen servicing a market?
A) flexibility
B) sensitivity
C) cultural empathy
D) productivity
E) breadth of knowledge
Q:
The economyʹs current rate of interest is 10 percent and a firm has $10,000 of owner -invested capital. Its total revenue is $5000 and the firmʹs explicit costs are $3500. From this we know that this firmʹsA) accounting profit is $500. B) economic profit is $1,500.C) accounting profit is $1,500. D) economic profit is $5,000.
Q:
NPV and IRR will always lead to the same accept/reject decision for mutually exclusive projects.
a. True
b. False
Q:
One reason channels of distribution often pose longevity problems is that most middlemen
A) do not maintain sufficient inventory to serve customers.
B) lack product knowledge resulting in low sales volume.
C) have little loyalty to their vendors.
D) tend to slow down distribution to extract higher commissions.
E) do not have sufficient knowledge of the target market.
Q:
Along an indifference curveA) every combination of goods the consumer can purchase with their income is given.B) the prices of goods will change.C) utility increases as you move to the right.D) every combination of the goods give the same level of satisfaction.
Q:
A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return.
a. True
b. False
Q:
Most middlemen handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. This is a problem associated with which of the six Cs of distribution channel strategy?
A) character
B) continuity
C) control
D) cost
E) capital requirement
Q:
When total utility is falling,A) marginal utility is at a maximum.B) marginal utility is at zero. C) marginal utility is negative.D) marginal utility has decreased, but is now increasing.
Q:
Using the discounted payback method, a project should be accepted when the discounted payback is greater than the project's expected life.
a. True
b. False
Q:
One way to get around the difficulty of full-market coverage in a country is to
A) seek significant penetration in major population areas.
B) avoid countries with multiple languages.
C) assess countries in terms of market segments, not geographic segments.
D) keep marketing efforts to highly developed areas.
E) focus on the use of one channel.
Q:
An increase in the discount rate used in computing the NPV of a project will lower the value of the NPV for that project.
a. True
b. False
Q:
Suppose that the absolute price elasticity of demand for hamburger is 1.15 and that the absolute price elasticity of demand for steak is 2.4. Then the absolute price elasticity of demand for beef will beA) less than 1.15. B) more than 2.4.C) between 1.15 and 2.4. D) equal to 1.15.
Q:
Transporting and storing goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations with middlemen most directly relate to which of the six Cs of the channel distribution strategy?
A) cost
B) control
C) coverage
D) character
E) continuity
Q:
Although the payback method ignores the time value of money, relying solely on this capital budgeting method will always lead to value maximizing decision.
a. True
b. False
Q:
Which mode of distribution affords the most control over the distribution channels but often at a cost that is not practical?
A) complementary marketers
B) direct sales force
C) export associations
D) trading companies
E) export management companies
Q:
It is assumed that the marginal benefit of air cleanliness falls with the degree of cleanliness sinceA) the marginal cost of air cleanliness increases.B) air cleanliness is a public good and not a private good.C) the marginal utility of air cleanliness falls with the degree of cleanliness. D) the generation of pollution should be considered an externality.
Q:
Relative povertyA) has been eliminated in the United States. B) will always be with us.C) has never existed in the United States. D) can be eliminated in the next 20 years.
Q:
Effective capital budgeting can improve the timing of asset acquisition and the quality of assets purchased, thereby providing an opportunity to purchase and install assets before they are needed.
a. True
b. False
Q:
What is one of the highest costs of doing business in China?
A) money required for the transportation of goods
B) money required for obtaining appropriate permits
C) cost of local advertising
D) capital required to maintain effective distribution
E) cost of customizing products for the Chinese market
Q:
Because we usually assume positive interest rates in time value analyses, the present value of a three year annuity will always be less than the future value of a single lump sum, if the annuity payment equals the original lump sum investment.
a. True
b. False
Q:
The marginal factor cost of a monopsonist isA) upward sloping and the same as the supply curve.B) downward sloping when the supply curve of labor is upward sloping.C) upward sloping and rises faster than the supply curve.D) horizontal.
Q:
Which mode of distribution in the foreign market will require a company to make the maximum financial investment?
A) export management companies
B) trading companies
C) export associations
D) direct sales force
E) complementary marketers
Q:
Financial calculator and tabular methods use different mathematical formulas to solve time value of money problems, and that is why they always lead to different results.
a. True
b. False
Q:
A business enterprise in which employees must belong to the union before they can be hired is called a(n)A) craft union. B) industrial union. C) closed shop. D) union shop.
Q:
What is a critical element associated with using a particular type of middleman?
A) knowledge of the culture of the target market
B) number of employees
C) mode of transportation for moving goods
D) influence over the target market
E) cash-flow patterns
Q:
If we calculate a periodic interest rate, say a monthly rate, in order to get the simple annual rate, we can multiply the periodic rate by the number of periods within a year.
a. True
b. False
Q:
The cost of hiring one more worker, ceteris paribus, is known asA) marginal revenue product. B) marginal physical product.C) marginal factor cost. D) marginal wage.