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The following questions are developed as a study aid for the C211 COS. They cover important concepts
in each competency. The questions are not comprehensive but are only designed to serve as an indicator
of your preparedness to take the C211 assessment. After reading the material for each competency, use
these questions to reinforce your understanding and review further as necessary.
COMPETENCY: International Trade and Foreign Exchange Market (Peng Chapters 5, 7, 10)
1- Give a description of the classical theory of international trade.
2- How would the modern theory compare to the classical theory?
3- Compare absolute advantage to comparative advantage. What differences exist?
4- What is mercantilism and why is this an important term?
5- What are the critical features of the product life cycle?
6- How would you describe strategic trade?
7- How are supply and demand related to the exchange rate of a country?
8- Which theory came first, mercantilism or modern-day protectionism?
9- If a company seeks to limit foreign exchange rate exposure in the forward direction, what is the
most effective way to do this?
10- What is transaction risk?
11- Explain the concept of “hedging” as it relates to reducing various types of risk.
12- What is the difference between currency hedging and strategic hedging?
13- What advantages exist with first mover?
14- What advantages exist with late mover?
15- Consider the model of foreign market entries. How is scale-of-entry related/relevant?
COMPETENCY: Firm Behavior under Different Market Structures (Mankiw Chapters 13-17)
1- How is marginal cost derived?
2- How is marginal cost related to total cost?
3- What is the specific formula to calculate marginal cost?
4- If Dave’s company has a total cost of $100 when quantity output is 5, and a total cost of $115
when quantity output is 6, what is the marginal cost of producing the 6th unit?
5- Total cost is made of two types of costs, what are they?
6- How does a firm determine to shut down in the short-run? What rule characterizes this?
7- What is a price taker? Which of the market structures are characterized as being “price takers”?
8- When a market is characterized as being a price taker, what fundamental shape does the
demand curve for this market take?
9- How is the demand curve for a perfectly competitive firm distinct from the demand curve for a
monopolistic market?
10- What does “downward sloping” with regards to a demand curve mean?
11- Where do firms with market power determine the quantity of product/service they will
produce?
12- What is the primary goal/objective of the firm?
13- If the firm has price setting capacity, how will they use information about marginal costs and
marginal revenues in order to accomplish their primary objective?
14- Describe the basic distinctions between the market models with respect to: number of market
participants, type of product being marketed, ease of entry/exit into the market, and the
prevalence of advertising/marketing.
15- What fundamental truth is realized when studying the behavior of an oligopolistic firm within
the context/model called “prisoner’s dilemma”?
16- How might an oligopolistic firm behave like a monopoly? What forces may prevent this?