Q&A Hero

Q: China has the infrastructure and the skilled labor that has enabled it to become a world manufacturing leader. This relates to which of Porter s attributes of a nation? A) firm strategy, structure, and rivalry B) related and supporting industries C) demand conditions D) factor conditions

Q: Factor endowments refer to the extent to which a country A) supports education, research, and development. B) develops the infrastructure to support industrialism. C) supports free trade. D) has such factors of production as land, labor, and capital.

Q: The main tenet of mercantilism is that it is in a country s best interests to A) maintain a trade deficit. B) maintain a trade surplus. C) import goods made from products that it does not have in abundance. D) import more than it exports.

Q: Which of the following balance-of-payment accounts records onetime changes in the stock of assets? A) capital account B) current account C) financial account D) monetary account

Q: A country s balance-of-payments accounts keep track of the A) basic factor endowments and advanced factor endowments that the nation possesses. B) payments to and receipts from other countries for a particular time period. C) income taxes paid by domestic firms and the spending on the firms. D) total value of taxes paid by domestic firms and the spending on the firms.

Q: If, for example, the textile industry in a nation is characterized by vigorous domestic rivalry, which of the following observations of this nation s international competency is most likely to be true? A) The nation will have access to such basic factors of the textile industry as natural resources. B) The nation s textile firms will have a competitive advantage in international trade. C) The domestic customers of the textile firms will be less demanding. D) The nation s textile industry will lack the advanced factors that are necessary to be internationally competent.

Q: Porter argues that a nation s firms gain competitive advantage if A) their domestic consumers lack technical awareness. B) they function in a labor-intensive market. C) the country has an abundant supply of unskilled workers. D) their domestic consumers and markets are sophisticated and demanding.

Q: Which of the following factors, according to Porter, is most likely to give a country competitive advantage over another country? A) natural resources B) climate C) skilled labor and know-how D) demographics

Q: Walmart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors. This allows Walmart to offer greater discounts to its customers. In this case, Walmart benefits from A) first-mover advantage. B) constant marginal returns. C) economies of scale. D) absolute advantage of production.

Q: Professor Baldwin believes that early in the life cycle of a U.S. product, demand in other advanced countries is limited to high-income groups. Consequently, it is seldom worthwhile for firms in those countries to start producing the product. This view conforms to A) the product life-cycle theory. B) Ricardo s theory. C) the theory of absolute advantage. D) the theory of comparative advantage.

Q: Country X, a developed country, invents a revolutionary electronic product. The country markets this new product in other poor countries to garner large profits. This occurrence is against the idea of A) product life-cycle theory. B) Ricardo s theory. C) theory of absolute advantage. D) theory of comparative advantage.

Q: Which of the following terms refers to a nation s position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry? A) current accounts B) factor endowments C) national balance D) national accounts

Q: According to Ricardo s theory of comparative advantage, a country should produce goods A) for which it has access to raw materials. B) that has lower opportunity cost. C) that have the highest domestic demand. D) for which it has an absolute advantage.

Q: Which of the following is a flaw associated with mercantilism? A) Mercantilists do not support government intervention in trade. B) Mercantilists view trade as a zero-sum game. C) Mercantilists recommend policies to maximize imports. D) Mercantilists recommend countries maintain a negative trade balance.

Q: _____ are unit cost reductions associated with a large scale of output. A) Current account deficits B) Economies of scale C) Current account surpluses D) Factor endowments

Q: The _____ argues that a large proportion of the world s new products had been developed by U.S. firms. A) product life-cycle theory B) Porter s diamond C) new trade theory D) Leontief paradox

Q: A capital-intensive country exports products that are capital intensive. Which theory is this an example of? A) new trade B) Leontief paradox C) Porter s diamond D) Heckscher-Ohlin

Q: The _____ theory argues that the pattern of international trade is determined by differences in factors of production endowments. A) comparative advantage B) Leontief Paradox C) Heckscher-Ohlin D) absolute advantage

Q: The Heckscher-Ohlin theory predicts that countries will A) export those goods that make intensive use of factors that are locally scarce. B) export those goods that make intensive use of factors that are locally abundant. C) import those goods that make intensive use of factors that are locally abundant. D) import those goods that make intensive use of factors that are available worldwide.

Q: The theory of comparative advantage suggests that trade is a _____ game in which all countries that participate realize economic gains. A) net-sum B) positive-sum C) zero-sum D) negative-sum

Q: According to Ricardo s theory of comparative advantage, countries should A) specialize in the production of those goods if they have lower opportunity cost. B) specialize in the production of those goods that their competitors in the world market currently have monopolies on. C) produce all the products for which they have an absolute advantage. D) produce only the products for which they have factors of production endowments..

Q: _____ argued that countries should specialize in the production of goods for which they have an absolute advantage. A) Paul Krugman B) David Hume C) David Ricardo D) Adam Smith

Q: The principle of mercantilism views trade as a(n) _____ game. A) advantage B) positive-sum C) zero-sum D) negative-sum

Q: _____ supports the idea that countries should export more than they import. A) Absolute advantage B) Mercantilism C) The world market theory D) New trade theory

Q: _____ stresses that in some cases countries specialize in the production and export of particular products because the world market can support only a limited number of firms. A) New trade theory B) Absolute advantage C) The world market theory D) Mercantilism

Q: David Ricardo s theory of comparative advantage explains global trade in terms of the A) first-mover advantage that certain countries and firms enjoy. B) geographical differences between various countries. C) opportunity cost. D) late-mover advantage that certain countries and firms possess.

Q: Which of the following observations is consistent with Michael Porter s theory of national competitive advantage? A) Factors such as domestic demand and domestic rivalry explain nations dominance in production. B) Countries should produce only those goods for which they have a comparative advantage. C) Interplay between the factors of production cause international marketing decisions. D) International differences in labor productivity determine nations supremacy in production.

Q: Country A exports electronic goods to Country B although there are no underlying differences in factor endowments between the two countries. Which of the following theories explains this anomaly? A) comparative advantage theory B) new trade theory C) Ricardo s theory D) Smith s theory

Q: _____ refers to a situation where a government does not attempt to influence through quotas or tariffs what its citizens can buy from another country. A) Fair trade B) Trade theory C) Free trade D) Mercantilism

Q: Explain Paul Samuelson s critique.

Q: What are the four attributes that are discussed in Porter s diamond?

Q: Explain Ricardo s theory of comparative advantage.

Q: Explain Smith s theory of absolute advantage.

Q: Utilitarian philosophy takes into consideration the principle of justice. ⊚ true ⊚ false

Q: A manager from the United States is sent to Nigeria to supervise the construction of a road. As a righteous moralist, he is likely to learn the ethics and values of Nigeria and follow them, even if they don t concur with his own. ⊚ true ⊚ false

Q: Milton Friedman s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. ⊚ true ⊚ false

Q: A firm s organizational culture refers to the values and norms that are shared among employees of an organization and those outside the organization. ⊚ true ⊚ false

Q: Societal business ethics are divorced from personal ethics. ⊚ true ⊚ false

Q: The Foreign Corrupt Practices Act was amended to allow facilitating payments to secure contracts that would not otherwise be secured. ⊚ true ⊚ false

Q: Corporations can contribute to the global tragedy of the commons by pumping pollutants into the atmosphere or dumping them in oceans or rivers in locations with weak environmental standards. ⊚ true ⊚ false

Q: Often, the code of ethics draws heavily upon documents such as the _____, which itself is grounded in Kantian and rights-based theories of moral philosophy. A) Convention on Combating Bribery of Foreign Public Officials B) UN Universal Declaration of Human Rights C) Convention on International Business Transactions D) Foreign Corrupt Practices Act

Q: What is the term for a company s formal statement of the ethical priorities it expects all of its employees to follow? A) code of ethics B) stakeholders pledge C) moral courage D) difference principle

Q: Establishing ________ involves a business resolving to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. A) a veil of ignorance B) a difference principle C) moral imagination D) moral intent

Q: Companies can strengthen the _____ of employees by committing themselves to not retaliate against employees who complain about unethical actions. A) moral courage B) code of ethics C) ethical strategies D) organizational culture

Q: ________ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder. A) Veil of ignorance B) Difference principle C) Moral imagination D) Noblesse oblige

Q: _____ is a French term that refers to honorable and benevolent behavior, considered the responsibility of people of high (noble) birth. A) Bienveillante B) Honourable C) Aristocratic D) Noblesse oblige

Q: Which of the following is an example of an external stakeholder? A) employees B) customers C) stockholders D) the board of directors

Q: A firm s _____ include customers, suppliers, and lenders. A) internal stakeholders B) clients C) external stakeholders D) community

Q: ________ enables managers to walk away from a decision that is profitable but unethical. A) Utilitarianism B) Righteousness C) Just distribution D) Moral courage

Q: The veil of ignorance was developed by _____ as part of his approach to justice theories. A) Milton Friedman B) John Rawls C) Kantian D) Leon Sullivan

Q: Under the veil of ignorance, everyone is imagined to be ignorant of A) all of his or her particular characteristics. B) fundamental rights and privileges. C) the moral worth of actions or practices. D) the minimum levels of morally acceptable behavior.

Q: Any person or institution that is capable of moral action such as a government or corporation is a A) moral agent. B) utilitarian. C) righteous moralist. D) naive immoralist.

Q: A ________ asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. A) Kantian ethicist B) righteous moralist C) naive immoralist D) utilitarian ethicist

Q: According to John Rawls s difference principle, A) certain people or institutions are obligated to provide benefits or services that secure the rights of others. B) fundamental human rights should transcend national borders and cultures. C) the best decisions are those that produce the greatest good for the greatest number of people. D) inequalities are justified if they benefit the position of the least-advantaged person.

Q: Mahatma Gandhi felt the best decisions are those that produce the greatest good for the greatest number of people.This demonstrates the ________ perspective. A) naive immoralist B) Friedman doctrine C) Kantian ethics D) utilitarian

Q: According to the naive immoralist, A) a multinational s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. B) the social responsibility of business is to increase profits, so long as the company stays within the rules of law. C) ethics are nothing more than the reflection of a culture. D) if firms in a host nation do not follow ethical norms then the manager of a multinational should not follow ethical norms there either.

Q: Miranda is a cultural relativist, which means she likely believes A) a firm should adopt the ethics of the culture in which it is operating. B) the only social responsibility of a firm is to increase profits. C) a firm s ethical policies should remain the same in all cultures. D) a multinational should follow its home-country cultural practices in all the host countries where it has operations.

Q: _____ recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. A) Rights theories B) Utilitarians C) Cultural relativists D) Kantian ethics

Q: The _____ approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. A) naive immoralist B) cultural relativist C) righteous moralist D) utilitarian

Q: Business ethics that either deny the value of business ethics or apply the concept in a very unsatisfactory way are termed A) straw man. B) the Sullivan principles. C) just distribution. D) rights theories.

Q: A British firm that sets up production units in China is accused of releasing untreated chemical waste into water bodies. The manager of the firm defends the firm stating that, factories in China set up by French and American firms also release untreated chemical waste into water bodies. What approach to business ethics is the manager using? A) righteous moralist B) utilitarian C) naive immoralist D) cultural relativist

Q: According to the _____, even if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should maintain the standards of the company s home country. A) cultural relativist B) righteous moralist C) utilitarian D) naive immoralist

Q: According to the _____ point of view, a firm should adopt the ethics of the culture in which it is operating. A) cultural relativism B) righteous moralist C) naive immoralist D) utilitarian approach

Q: _____ arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate. A) Rawls B) Kantian C) Sullivan s D) Friedman s

Q: _____ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate ethical decision making in a multinational enterprise. A) Cultural relativism B) The righteous moralist C) Straw man D) The naive immoralist

Q: Grady works at a fast food restaurant. One day he noticed a co-worker giving free food to a friend. He was unsure about what to do. Grady most likely decided to follow the example of A) other employees. B) his supervisor. C) his family. D) government leaders.

Q: Which of the following is a reason managers working abroad in multinational firms may behave in a manner that is unethical? A) psychological, cultural, and geographical distances of a foreign subsidiary from the home office B) pressure from an ethical leader C) confusion between personal ethics and business ethics D) incorporating ethical issues into strategic and operational decision making

Q: Josiah was managing a factory in India, and had a decision to make. The factory used child labor, which he disapproved of, but he knew the families of these children might starve without their income. This situation, in which none of the available alternatives seems morally acceptable, is called A) an ethical dilemma. B) noblesse oblige. C) the tragedy of the commons. D) the free rider problem.

Q: Ethical dilemmas exist because many real-world decisions involve A) first-, second-, and third-order consequences that are hard to quantify. B) people from different cultures. C) employers and employees. D) people from different multinational firms.

Q: In the international business setting, one of the most common ethical issues involves A) hiring practices. B) government deregulation. C) the moral obligation of multinational corporations. D) facilitating payments.

Q: _____ are the accepted principles of right or wrong governing the conduct of businesspeople. A) Sustainable strategies B) Business ethics C) Moral worth of actions D) Ethical strategies

Q: BP, one of the world s largest oil companies, has made it part of the company policy to undertake social investments in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made its success possible. BP s actions are an example of A) cultural relativism. B) the Friedman doctrine. C) noblesse oblige. D) the tragedy of the commons.

Q: An international U.S.-based company sets up a production unit in a developing country with poor environmental regulations. This contributes to the A) noblesse oblige situation. B) inequity aversion. C) global tragedy of the commons. D) Friedman effect.

Q: The _____ occurs when a resource that is shared by all, but owned by no one, is overused by individuals, resulting in its degradation. A) Friedman effect B) noblesse oblige C) inequity aversion D) tragedy of the commons

Q: The _____ obliges member states to make the bribery of foreign public officials a criminal offense and excludes facilitating payments made to expedite routine government action from the convention. A) Convention on Combating Bribery of Foreign Public Officials B) Foreign Corrupt Practices Act C) Convention on International Business Transactions D) Universal Declaration of Human Rights

Q: Facilitating payments are also known as A) grease monkeying. B) pocket lining. C) speed money or grease payments. D) sliding.

Q: The _____ outlawed the paying of bribes to foreign government officials to gain business. A) Convention on Combating Bribery of Foreign Public Officials B) Foreign Corrupt Practices Act C) Convention on International Business Transactions D) Universal Declaration of Human Rights

Q: The _____ occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. A) tragedy of the commons B) moral ignorance C) noblesse oblige D) veil of ignorance

Q: Explain the concept of moral imagination as it relates to a company s stakeholders.

Q: Discuss the naive immoralist s approach to business ethics. What are the criticisms of this approach?