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WGU Global Economics for Managers (C211, UZC2) Sample Questions:

1. Managers and firms rationally pursue their interests and make choices within institutional constraints. This is one of the two core propositions underpinning an institution-based view of global business. Which situation illustrates this proposition?

A) Several businesses relocate overseas because of a new domestic tax policy that will increase their tax liability by 15%.
B) Government corruption is rampant in a particular country, leading to a high cost of doing business.However, some smaller companies have figured out how to legally evade the most fraudulent abuses, and for them the cost of doing business becomes much cheaper. For this reason, the companies stay and have a lucrative decade.
C) When a company opens a new production facility, company leaders find out that the laws of that country may allow it to skip several important safety steps. In doing so, the cost of production goes down, but there is a risk to the surrounding environment. The leaders decide not to skip these safety steps out of a deep concern and commitment to environmental protection.
D) Two failing banks are pursuing the option of being acquired by another institution. One bank is able to leverage political relationships to result in a successful acquisition. The other bank pursues no such political solution and eventually files for bankruptcy.

2. Which GDP component is affected when a parent pays for a child's college education?

A) Investment
B) Government purchases
C) Consumption
D) Net exports

3. Which entrant is able to erect significant barriers for other entrants?

A) First mover
B) Dodger
C) Late mover
D) Contender

4. When confronting MNEs, the extender strategy centers on what?

A) Cooperating through joint ventures (JVs) with MNEs and sell-offs to MNEs
B) Engaging in rapid learning and then expanding overseas
C) Leveraging homegrown competencies abroad
D) Leveraging local assets in areas in which MNEs are weak

5. When is it best for a firm to increase production?

A) When average cost is minimized
B) When total revenue is maximized
C) When marginal cost exceeds marginal revenue
D) When marginal revenue is greater than marginal cost

Solutions: