Chapter 5: The Europeanization of a business environment

Multiple Choice

1. Which of the following statements best describes the impact of the Europeanization of business via the Single Market?

a. The Single Market primarily reinforced existing patterns of doing business across borders.

b. The Single Market impacted business through both trade creation and diversion across borders.

c. The Single Market only impacted business through cross-border trade creation.

d. The Single Market only impacted business through cross-border trade diversion.

2. Which trade theory recommends that countries should specialize in producing those goods they have a competitive advantage in to maximize the benefits of trade?

a. mercantilism

b. absolute advantage

c. comparative advantage

d. new trade theory

3. Which trade theory argues that countries can benefit from trade liberalization and participation in international trade even when the country’s industries have no international competitive advantage?

a. mercantilism

b. absolute advantage

c. comparative advantage

d. new trade theory

4. Which of the theories of trade listed below most clearly illustrates the dynamic relationship between cross-border trade and investment?

a. product life cycle

b. absolute advantage

c. comparative advantage

d. new trade theory

5. What has research shown the main implications of Europeanization of international trade and investment to have been for firms and industries?

a. limited impact on the structure of industries, even when considering firm and industry size

b. Europeanization leads to fragmentation of industries as they become larger.

c. Industries tend to consolidate and get bigger when markets enlarge and competition grows.

d. none of these

6. When a European business invests in a location outside Europe, what type of foreign direct investment is it undertaking?

a. intra-European foreign direct investment

b. trade diverting investment

c. extra-European foreign direct investment

d. trade creating investment

7. Which of the following best describes a situation where a European business contracts a firm in a non-European country to produce a good for sale in Europe, that have previously been produced by the European business in Europe?

a. offshoring

b. outsourcing

c. offshore outsourcing

d. none of these

8. Which of the following best describes the necessary condition(s) for seeking a foreign location for investment by a European business?

a. owning strong assets (ownership advantages)

b. a need to retain managerial control over the use of these assets (internalization)

c. a need to avoid competitors gaining the use of the (especially intangible) assets

d. all of these

9. What has been the observed pattern of changes in income inequality when compared between and within EU member countries before social transfers?

a. limited convergence of income inequality patterns in the short term

b. uneven convergence of income inequality patterns in the short term

c. significant convergence of income inequality patterns in the short term

d. none of these

10. What form of intellectual property protection is used to protect the contribution of the unique cultural and geographic origins of a product produced in the EU?

a. patents

b. industrial designs

c. geographical source indications

d. copyright