REVIEWER

DIRECTION: CHOOSE THE LETTER OF THE CORRECT ANSWER.

1. Which of the following is important to knowledge application for product
innovation?
a. Markets and customers
c. core organizational strengths
b. Product and process technology
d. all of the above
2. What is the key driving force in globalization?
a. Developments in technology
c. mercantilism
b. Absolute advantage
d. differences in cultural values
3. Which concepts are closely associated with comparative advantage?
a. Labor unions and a living wage
c. taxes and Ponzi games
b. Opportunity cost and efficiency
d. none of the above
4. Under disruptive innovation strategy, what is an ideal relationship between
organizations and customers?
a. Customers must be kept uncertain about the disruption
b. Organizations should help customers and not try to change them
c. Organizations should force customers to sign long term contracts to
guarantee profitability
d. None of the above
5. Under what circumstances is trade NOT beneficial under comparative
advantage?
a. When relative production costs are the same
b. When opportunity cost is taxed
c. When goods are perishable
d. When absolute advantage trumps comparative advantage
6. Which of the following is a true statement about comparative and absolute
advantage?
a. A country cannot have an absolute advantage if its currency is fixed.
b. A countrys resources are irrelevant to comparative advantage.
c. A country can never have an absolute advantage in the production of all
goods.
d. A country can have an absolute advantage in the production of all goods, yet
mutually beneficial trade is still possible.
7. If country A can produce 7 boats and 21 planes, and country B can produce 5
boats and 10 planes, which country has an absolute advantage in which goods?
a. Country A in both goods
c. Country A in planes and Country B
in boats
b. Country B in both goods
d. Country A in boats and
Country B in planes
8. According to Dr. Joseph Stiglitz, developing countries tend to bear a tremendous
amount of risk in a globalized environment. Which of the following causes did he
cite for this?
a. Contracts are short term and are subject to interest rate risks.
b. Governments in developing countries are unstable and carry high political
risk.
c. Loans are made in so-called hard currencies, thus they carry exchange rate
risks.
d. Both A and C
9. According to Dr. Joseph Stiglitz, what effects will a fully integrated market have
on the wages of low-income workers?
a. All workers will benefit from higher real wages.
b. Workers in low-wage countries will see their wages fall.
c. Workers in high-wage countries will see their wages fall.
d. All workers will be harmed from lower real wages.

10.In a globalized economy, which countries and firms will benefit

disproportionately?
a. Those taking advantage of technology
c. those with few natural
resources
b. Those employing specialized labor
d. Both B and C
11.Which of the following is an example of vertical integration?
a. A restaurant supply company buys a chain of restaurants.
b. A soap company launces a new line of fragrance-free and hypoallergenic
soaps.
c. A television station buys a radio station
d. A horse farm buys an insurance agency.
12.Which strategy uses bankruptcy laws?