C211 Global Economics for Managers Practice Questions - Set 4 - Part 3

Correct Answer: b) Sunk cost

A sunk cost refers to money already spent and cannot be recovered, often influencing decisions even though it should not affect future investment choices.

Correct Answer: c) Totalitarianism

Totalitarianism is a political system in which one person or party exercises complete control over all aspects of public and private life.

Correct Answer: b) Extender strategy

The extender strategy involves leveraging homegrown competencies in foreign markets, often to capitalize on established strengths.

Correct Answer: b) Marginal cost

Marginal cost is the additional cost incurred when producing one more unit of output, helping firms make decisions about production levels.

Correct Answer: c) Voluntary export restraint (VER)

A voluntary export restraint (VER) is an international agreement where exporting countries voluntarily limit the amount of goods they export to a particular country.

Correct Answer: c) Agglomeration

Agglomeration refers to the clustering of economic activities in specific locations, which leads to benefits such as shared resources, labor, and infrastructure.

Correct Answer: a) Patent

A patent grants firms the exclusive legal right to control the use of their inventions, allowing them to derive income from their innovations.

Correct Answer: b) Blue ocean strategy

The blue ocean strategy focuses on creating new markets or industries where there is little to no competition, avoiding the "red ocean" of saturated, competitive markets.

Correct Answer: a) Consumer surplus

Consumer surplus is the difference between what buyers are willing to pay for a good and what they actually pay, representing the extra benefit they receive from the transaction.

Correct Answer: a) Mercantilism

Mercantilism is an economic theory that views global wealth as fixed and suggests that nations should strive to accumulate wealth by exporting more than they import, increasing their gold reserves.