Which statement describes one of the three views of globalization?
Correct Answer: B
Globalization can be viewed from different perspectives. One view treats globalization as a relatively new force that has intensified in recent decades due to major advances in technology, transportation, communication, global finance, and international trade liberalization. This view emphasizes that modern globalization is different from earlier cross-border exchange because firms, consumers, capital markets, and supply chains are now connected at much greater speed and scale. Option B is correct because it captures the "recent force" view of globalization. Option A is too idealistic because globalization creates both benefits and costs. Option C is incorrect because globalization is not primarily an agreement to prevent wars. Option D is also incorrect because globalization often increases innovation through competition and knowledge transfer.
Question 32
What are represented by informal institutions?
Correct Answer: B
Informal institutions are unwritten social constraints that shape behavior, including norms, customs, values, traditions, and ethics. Option B is correct because ethics represents an informal guide to behavior rather than a formally codified legal requirement. Informal institutions reduce uncertainty by helping people understand what is socially acceptable, trustworthy, or legitimate in a particular society. They matter greatly in global business because managers may comply with formal laws but still fail if they ignore local customs or ethical expectations. Rules and regulations are usually formal when written and enforced by legal authorities. Written laws are clearly formal institutions. Informal institutions are enforced mainly through social approval, reputation, relationships, and cultural expectations rather than courts or government penalties.
Question 33
What is the profit maximization condition for a monopoly?
Correct Answer: B
InGlobal Economics for Managers, the profit-maximizing condition forall firms, including monopolies, is whenmarginal revenue (MR) equals marginal cost (MC), making option B correct. A monopolist faces a downward-sloping demand curve, meaning that to sell more output, it must lower price. As a result, marginal revenue is less than price. The firm maximizes profit by producing the quantity where the additional revenue from the last unit sold equals the additional cost of producing it. Option A applies toperfect competition, not monopoly. Option C focuses on revenue rather than profit. Option D has no economic meaning for profit maximization. Thus, option B is correct.
Question 34
Which statement is true for a monopoly firm, but not for a competitive firm?
Correct Answer: C
In Global Economics for Managers , a key distinction between monopolies and perfectly competitive firms is the relationship between price and marginal revenue . For a monopoly, marginal revenue is less than price , making option C correct. A monopoly faces a downward-sloping demand curve , meaning that to sell an additional unit, the firm must lower the price not only for the marginal unit but also for all previous units sold. As a result, marginal revenue declines faster than price and always lies below the demand curve. In contrast, a perfectly competitive firm is a price taker . It can sell as much output as it wants at the market price, so marginal revenue equals price. Options A and B describe competitive firms, not monopolies. Option D is incorrect because monopolies can earn economic profits in the long run due to entry barriers. Thus, option C correctly identifies a feature unique to monopoly firms.
Question 35
What are examples of regulatory pillars? (Choose TWO.)
Correct Answer: B,D
InGlobal Economics for Managers,regulatory pillarsare part of the institutional framework and refer to formal rules, laws, and enforcement mechanismsthat guide behavior through coercion and legal sanctions. Examples include laws backed by penalties for noncompliance, making options B and D correct. Option B-reporting a crime because it is illegal to withhold information-clearly reflects compliance driven bylegal obligation and enforcement. Option D-paying parking tickets out of fear of license suspension- also demonstrates behavior shaped by formal sanctions imposed by authorities. The remaining options reflectnormative or cognitive pillars, not regulatory ones. Options A and E describe behavior influenced by social norms rather than laws. Option C reflects herd behavior and shared beliefs, a cognitive pillar. Option F reflects deeply held moral values, characteristic of normative institutions. Global Economics for Managersemphasizes that regulatory pillars are especially important for managers because they define the legal boundaries of business activity and impose explicit costs for violations. Thus, options B and D accurately represent regulatory pillars.
