Free International Business - I 01 Practice Test - 11th Grade - Commerce 

Question 1

Customers are not homogeneous in the international market due to the different religion, caste, languages and so on. 

A.

True

B.

False

SOLUTION

Solution : A

True. Customers across the world are from different religions and cultural backgrounds. Moreover, their tastes and preferences also vary. 

Question 2

In liberalised economies, international trade is not subject to policies and regulations and can be carried out freely. 

A.

True

B.

False

SOLUTION

Solution : B

False. International trade is always subject to various government regulations, policies, and tax regimes all over the world. 

Question 3

International trade takes place because of unequal distribution of resources.

A.

True

B.

False

SOLUTION

Solution : A

True. There are certain things that each country can produce efficiently. A country can produce a surplus of those products or services and export them to other countries. Similarly, it can import the goods or services which it is deficient in. This pattern of expertise based on uneuqal distribution of resources provides a strong incentive for international trade.

Question 4

There is involvement of more than one currency in which of the following trade:

A.

Domestic trade

B.

International trade

C.

Internal trade

D.

None of the above

SOLUTION

Solution : B

International trade involves buying and selling of different goods and services across the world, which in turn involves purchase and sale of different international currencies.

Question 5

The cost of production in the developed economy is ___ than the cost of production in developing countries.

SOLUTION

Solution :

Question 6

In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee:

A.

Licensing 

B.

Contract manufacturing 

C.

Joint venture

D.

None of these

SOLUTION

Solution : A

In licensing, the domestic manufacturer gives the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee.

Question 7

Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as:

A.

Licensing 

B.

Franchising 

C.

Contract manufacturing 

D.

Joint Venture

SOLUTION

Solution : C

Contract manufacturing refers to outsourcing a part of or entire production and concentrating on marketing operations in international business. 

Question 8

When two or more firms come together to create a new business entity that is legally separate and distinct from its parents it is known as___

A.

Contract manufacturing 

B.

Franchising 

C.

Joint Ventures 

D.

Licensing 

SOLUTION

Solution : C

When two or more firms come together to create a new business entity that is legally separate and distinct from its parents it is known as a joint venture.

Question 9

Which of the following is not an advantage of exporting?

A.

Easier way to enter into international markets 

B.

Comparatively lower risks 

C.

Limited presence in foreign markets 

D.

Less investment requirements 

SOLUTION

Solution : C

Limited presence in foreign markets is not an advantage of exporting.

Question 10

Which one of the following modes of entry requires higher level of risks?

A.

Licensing 

B.

Franchising 

C.

Contract manufacturing 

D.

Joint venture 

SOLUTION

Solution : D

Joint venture requires higher level of risks.