What term best describes a firm informing customers about a product’s benefits?
a) Advertising
b) Certification
c) Disclosure
d) Notice
e) Broadcasting
Why do price-sensitive buyers tend to harm cooperative pricing in a market?
a) They cause an increase in detection lags because competitor prices become more
difficult to monitor
b) There is a resultant decrease in the frequency of interaction between competitors
c) There is an increase in the probability of misreads
d) The is an increase in temptation to cut price, even if competitors are expected to
match
e) There is an increase in detection lags because prices of competitors are more difficult
to monitor
Which of the following represents consumer surplus in the value creation equation,
(B-P) + (P-C)?
a) B
b) P
c) C
d) B-P
e) P-C
What is throughput?
a) The movement of inputs and outputs through a production process
b) Assets that assist in the production or distribution of goods and services
c) A condition that determines the horizontal and vertical boundaries of business firms
d) An investment in the acquisition of raw materials
e) The amount of time for a good to travel between metropolitan areas
Which of the following terms describes a contract based on information that cannot be
observed by courts or arbitrators?
a) Explicit incentive contract
b) Implicit incentive contract
c) Risk sharing contract
d) Compensation contract
e) Pay-for-performance
Which of the following statements is true about how the volatility of demand conditions
affects the sustainability of cooperative pricing?
a) Price cutting is easier to detect when demand conditions are volatile
b) Pricing coordination becomes easier in a volatile demand condition because firms are
chasing a moving target
c) Price cutting is harder to detect when demand conditions are stable
d) Demand volatility is an especially serious problem when the production involves
substantial variable costs
e) Demand volatility is an especially serious problem when the production involves
substantial fixed costs
What criterion developed by the DOJ is used to identify all potential competitors within
the market?
a) Market competition criterion
b) DOJ competition criterion
c) SSNIP criterion
d) SIC criterion
e) DOJ market criterion
In which of the following markets is a consumer more sensitive to price?
a) Credit Cards
b) Items sold door to door
c) Customized software upgrade
d) Copier/Printer Toner
e) Health Care
What caused the market conditions facing the telephone to be uncertain until the
1880’s?
a) Patent conflicts
b) Technology problems due to unstable electricity supplies
c) Dissimilar technologies limiting interconnections between cities
d) Different state laws limiting interstate expansion
e) The high cost fo some components needed to manufacture telephones
What type of clause is a provision in a sales contract that promises a buyer that it will
pay the lowest price the seller charges?
a) Low price clause
b) Price matching clause
c) Best price clause
d) Most favored customer clause
e) Competitive price clause
What is a benefit of the de-centralized organization coordination solution?
a) Ensures no coordination opportunities are missed
b) Makes the organization more hierarchical
c) Takes advantage of localized information
d) Improves communication
e) Always encourages collaboration
Examining which of the following is broadly considered one of the easiest ways to
measure diversifying activity?
a) Joint Ventures
b) Mergers and acquisitions
c) Internal Business Development
d) Strategic Alliances
e) Collaborative agreements
What type of structure is the Japanese keiretsu structure?
a) Unitary functional structure
b) Multidivisional structure
c) Matrix structure
d) Network structure
e) Individual structure
Which of the following is not a feature of selective contracting (used by Managed Care
Organizations) that intensified internal rivalry?
a) Had infrequent (contract lengths of two to three years) and lumpy (one insurer may
have represented over 5% of a hospital’s business) sales
b) Treated all hospitals as identical
c) Kept price negotiations between insurers and hospitals secret, encouraging hospitals
to lower prices to win contracts
d) Contracted with hospitals that patients were most loyal to
e) Created pressure for hospitals to win each individual contract with no thought of
future consequences
Which of the following statements is least true regarding the costs that regulation
imposes on firms?
a) Regulation costs include lower prices for goods that consumers pay
b) Regulation costs include costs of compliance
c) Regulation costs include increased business costs due to noncompliance
d) Regulation costs include the costs of strategic options that must be forgone because
of regulations
e) Regulation costs include potential distortions to a market that may result from the
imperfections of a given regulatory regime
In departmentalization, which of the following is a required step?
a) Specifying relationships between chosen dimensions
b) Allocating costs across departments
c) Creating agency alignment between departments
d) Identifying principals
e) None of the above
Which of the following practices does not contribute to the strategic fit of Southwest
Airlines?
a) No in-flight catering
b) Use of multiple types of planes
c) No use of congested airports
d) Re-engineered boarding process
e) No first class section on plane