Besides Cost Constraints, Exporters Often Face Additional Challenges

question 227

Multiple Choice

Besides cost constraints, Exporters often face additional challenges. An example of a nontariff barrier was the former Japanese keiretsu:

• A)a nepotistic event that only permitted persons related to the owner to trade with a company.
• B)a trading system that made certain that if a Japanese firm was involved in a global trade, the Japanese firm would always benefit financially, and often to the detriment of the other party.
• C)a family of companies that joined together to forge semi-permanent ties with suppliers, customers, and distributors. It was difficult to break into the family.
• D)a shelter in Tokyo where all trading took place. If the trading partner refused to bring their products to the shelter, it could not successfully trade.

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Definitions:

Variable Costs

Costs that change directly and proportionately with the level of production or business activity.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Margin of Safety

The difference between actual sales and the break-even point, which measures the cushion that a business has to withstand a sales downturn.