Question

1. _____ is the least risky and _____ is the most risky when expanding overseas.
A. exporting, franchising
B. direct investment, exporting
C. exporting, direct investment
D. strategic alliance, exporting

2. Barriers between people from different countries can include:
A. language differences
B. personal space differences
C. adherence to time/schedules
D. all of the above

3. A licensing agreement allows you to:
A. enter a market quickly
B. hold minimal financial risk
C. incur minimal overall risk
D. all of the above

4. There is a relationship between opportunity cost and ____.
A. comparative advantage
B. direct investment
C. trade deficit
D. trade surplus

5. In a trade deficit situation, ____ money leaves the country.
A. not enough
B. too much
C. just the right amount of
D. none of the above

Answer 1

1.C. exporting, direct investment.

Exporting involves almost no risk while direct investment involves the maximum amount of risk in terms of uncertain returns.

2. D. all of the above.

3. A. enter a market quickly.

4. A. comparative advantage.

Harberler propounded the relationship between comparative advantage and opportunity cost. According to this theorem, a country has a comparative advantage in that commodity where its opportunity cost is the lowest. It should specialize in the production of this commodity.

5. B. too much.

In a trade deficit, imports exceed imports implying more money is leaving the country than is entering.