MAN6608 Midterm Solution
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1. According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends?
U.S. imports become less capital-intensive than U.S. exports.
The pattern of international trade is affected by differences in factor endowments rather than differences in productivity.
Over time, the United States switches from being an exporter of a product to an importer of the product.
The wage rates in the United States decrease.
Developing nations fail to upgrade their skill levels to compete with advanced countries.
1. What is the shift toward a more integrated and interdependent world economy called?
Foreign direct investment
1. Capricorn Creative Inc., a U.S.-based advertising firm, was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in its economy. As a result, the firm was able to build brand loyalty and gain experience in that country's business practices. In the language of business strategy, Capricorn Creative has typically benefited from:
a first-mover advantage.
1. Animax Limited got an order to sell 50,000 central processing units (CPUs) to Palladia, but the Palladian government stipulated that 15 percent of the component parts of those CPUs must be produced in Palladia. This stipulation by the Palladian government would be example of a(n):
voluntary export restraint.