BBA 3rd Year Basics Of International Trade Very Short Question Answer Study Notes Unit-Wise division of the content Book Code-604
Very Short Answer Questions)
Q.1. What do you mean by international trade? (2014)
Ans. International trade consists of transactions between residents of different countries.
Q.2. What do you mean by globalisation?
Ans. Globalisation means different things to different people. Globalisation may be defined as the integration of countries into world economy or one global market.
Q.3. Why companies go international?
Ans. The basic reasons for companies to go international are:
(a) To expand sales.
(b) To acquire resources.
(c) To achieve higher rate of return.
Q.4. What is the basic difference between domestic and international business?
Ans. International business may be simply defined as the business transaction that takes place across the national borders. On the other hand. domestic business is the business transaction that takes place within the country.
Q.5. Give the name of various factors that affect the growth of international business.
Ans. Factors affecting the growth of international business are:
(a) Liberalisation of government policies.
(b) Advancement of technology.
(c) Growing entrepreneurship.
(d) Increase in competition.
Q.6. What are the basic problems of international trade?
Ans. The basic problems of international trade are :
(a) Tariffs, quotas and trade barriers.
(b) Foreign exchange rate.
(c) Market inefficiency.
(e) Technological pirating.
Q.7. What are the drivers of international trade?
Ans. The drivers of international trade are technology, culture, market needs, cost free market, econointegration, peace global strategy and action.
Q.8. Give the names of various restraining forces of international trade.
Ans. The basic restraining forces are culture, market differences, costs, national control, war, management myopia, domestic focus etc.
0.9. Explain the geocentric approach of international business.
Ans. Instead of extending the domestic product into international markets, a firm tries to id. similarities in consumption pattern that can be targeted with a standard product around the Psychographic segmentation is helpful in identifying consumer profiles beyond the national bord teocentricapproach, there is a high degree of centralisation and coordination of marketing produ activities resulting in higher economic scale in the various constituents of marketing business.
Q.10. Give any three assumptions of classical theory of international trade.
Ans. The three assumptions of classical theory of international trade are as follows:
(a) The classical economist assume two countries and two commodities model.
(b) It is further assumed that these two countries are economically at par.
(c) All labourers are assumed to be homogeneous.
Q.11. Give any three assumptions of factor proportion theory.
Ans. The three assumptions of factor proportion theory are as follows:
(a) There are two countries or regions say X and Y, each having a free paper currency and each capable of producing any two commodities.
(b) There are two factors of production i.e. labour and capital.
(C) The method of production and the production function for both commodities are same for different countries.
Q.12. What is the conclusion of comparative cost advantage theory?
Ans. The main conclusion of this theory is that the business between two countries is profitable when a country produces one commodity at a lower cost than the other country and that other produces another commodity at a lower cost than the former country.
Q.13. What are the main causes of unfavourable terms of trade?
Ans. Main causes of unfavourable terms of trade are :
(a) Effect of technical progress.
(b) Nature of product.
(c) Elasticity of supply.
(d) Size of population.
(e) Size of country.
Q.14. What is the main importance of international trade in Indian economy?
Ans. The main importance of international trade in Indian economy are :
(a) Helpful in the expansion of product capacity.
(b) To get the advantage of technical advancement.
(c) To meet the demand of consumer goods.
Q.15. Define the term trade.
Ans. The term trade is defined as the quantity of domestic goods that must be given in exchange for one unit of imported goods.
Q.16. What is meant by opportunity cost?
Ans. The opportunity cost approach defines cost in terms of the value of the alternatives of other opportunities. which have to be foregone in order to achieve a particular thing. According to (2015) the opportunity cost theory, the basis of international trade is the differences between nations in the opportunity costs of production of commodities. As far as the basis of international trade and specialisation are concerned, the logic behind the comparative cost approach and the opportunity cost approach is the same.