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1			The theory of comparative cost advantage is based on the observation that a country will:
			A)	aim to minimise the cost of its producers.
			B)	export what it is good at and import goods where it is weak.
			C)	import what it is good at and export goods where it is weak.
			D)	always aim to produce goods and service at a comparable cost compared to the most efficient economy.
2			All of the following are examples of major limitations on the concept of comparative cost advantage EXCEPT:
			A)	imposition of tariffs
			B)	quotas on imports
			C)	subsidies for export of goods
			D)	investment to produce economies of scale
3			An exchange rate is:
			A)	the level of interest rates
			B)	the transaction cost of exchanging money at a bank
			C)	the price of one currency in terms of another currency
			D)	the price of money in terms of goods
4			Which of the following factors is most likely to increase the value of sterling in terms of the Euro?
			A)	increase in imports to the UK from Euro zone countries
			B)	increase in imports to Euro zone countries from the UK
			C)	increase in domestic taxation within Euro zone countries
			D)	increase in UK domestic taxation
5			Assuming that £1 = $1.50 at the beginning of the year, a 10% annual level of price inflation in the UK (compared to no inflation in the USA), could be expected to lead to new exchange rate of £1 = $___ by the end of the year (assuming all other factors are held constant):
			A)	$1.00
			B)	$1.10
			C)	$1.35
			D)	$1.65
6			Which of the following is an example of an invisible trade item?
			A)	overseas sales of motor vehicles
			B)	overseas sales of newspapers
			C)	overseas sales of information services
			D)	imports of new technology
7			Which of the following best represents a ‘pull’ factor which leads firms to engage in international trade?
			A)	liberalisation of overseas markets
			B)	new product developments
			C)	increasing levels of competition in the domestic market
			D)	liberalisation of domestic market
8			The shipping industry in Panama has a comparative cost advantage, largely based on:
			A)	superior technology
			B)	geographical location
			C)	preferential legislation
			D)	social infrastructure
9			A restaurant chain is considering setting up an operation in an overseas country, is most likely to begin its research by:
			A)	conducting secondary research in its target market
			B)	conducting primary research in its target market
			C)	conducting secondary research at home
			D)	conducting primary research at home
10			Which of the following overseas market entry strategies is likely to present a grocery retailer with the lowest level of risk?
			A)	management contracting
			B)	joint venture
			C)	direct investment
			D)	franchising