1. Distinguish between an absolute advantage and a comparative advantage. Cite an example of a country that has an absolute advantage and one with a comparative advantage.

2. What effect does devaluation have on a nation's currency? Can you think of a country that has devaluated or revaluated its currency? What have been the results?

3. What effect does a country's economic development have on international business?

4. How do political issues affect international business?

5. What is an import tariff? A quota? Dumping? How might a country use import tariffs and quotas to control its balance of trade and payments? Why can dumping result in the imposition of tariffs and quotas?

6. How do social and cultural differences create barriers to international trade? Can you think of any social or cultural barriers (other than those mentioned in this chapter) that might inhibit international business?

7. Explain how a countertrade agreement can be considered a trade promoter. How does the World Trade Organization encourage trade?

8. At what levels might a firm get involved in international business? What level requires the least commitment of resources? What level requires the most?

9. Compare and contrast licensing, franchising, contract manufacturing, and outsourcing.

10. Compare multinational and global strategies. Which is best? Under what circumstances might each be used?