When firms encounter problems that differ according to their difficulty and frequency it
is known as:
a) A problem set
b) Knowledge hierarchy
c) Agency collection
d) Organizational collection
e) None of the above
Which of the following terms involves the flow of information within an organization
to facilitate subunit decisions that are consistent with each other and with organizational
objectives?
a) Complex hierarchy
b) Coordination
c) Control
d) Hierarchy of authority
e) Departmentalization
Which of the following best describes a credence good?
a) Products for which consumers can easily evaluate quality even after purchasing and
using the product
b) Products for which consumers rely on other purchasers’ experience before buying
c) Products for which consumers cannot easily evaluate quality even after purchasing
and using the product
d) Products for which consumers always, or almost always, purchase with a warranty
e) None of the above
Which of the following structures involves multiple groups and multiple levels of
groupings arising from the need not just to organize individuals into groups, but to
organize groups into larger groups?
a) Complex hierarchy
b) Coordination
c) Control
d) Hierarchy of authority
e) Departmentalization
What was the major role of private banks in the early 1800s?
a) Serve as an institution for deposits
b) Issue credit
c) Reduce the risk of price fluctuation
d) Create futures markets
e) Sell stocks
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
What was a key factor that aided foreign steel producers in penetrating U.S. markets?
a) Shifting demand in the economy to “lighter” products
b) Invention of the basic oxygen furnace
c) Development of the continuous casting process
d) U.S. steelmakers’ commitment to “light” products
e) Development of the electric arc furnace
What term represents the conduct and performance of firms in the market after entry
has occurred?
a) Postentry competition
b) Postentry actions
c) Postentry procedures
d) Postentry diversification
e) Postentry strategic decisions
What term best describes an agent who is indifferent between a sure thing and a gamble
of equal expected value?
a) Risk sharing
b) Risk seeking
c) Risk neutral
d) Risk averse
e) Risk premium
What group/type of preferences describes when tastes differ markedly from one person
to the next and result in horizontal differentiation?
a) Search preferences
b) Horizontal preferences
c) Consumer preferences
d) Spatial preferences
e) Idiosyncratic preferences
When consumers learn about one seller at a time it is known as a :
a) Simultaneous search
b) Parallel search
c) Serial search
d) Sequential search
e) Divided search
What type of effect describes how a commitment impacts the present value of the firm’s
profits, assuming the firm adjusts its own tactical decisions in light of this commitment
and that its competitor’s behavior does not change?
a) Tactical effect
b) Financial effect
c) Direct effect
d) Strategic effect
e) Indirect effect
Which of the following refers to when a firm with a patent uses its market power to set
a high price ” cost margin?
a) Cost power
b) Pricing power
c) Legal power
d) Limiting power
e) Structural power
What term best describes clusters of activities that a firm does especially well in
comparison with other firms?
a) Competitive advantage
b) Resources
c) Capabilities
d) Threats to sustainability
e) Strategic firm assets
Which of the following features of transactions make those transactions excellent
candidates for alliances?
a) The transaction involves impediments to comprehensive contracting
b) The transaction is complex, not routine.
c) The transaction involves the creation of relationship-specific assets by both parties in
the relationship, and each party to the transaction could hold up the other
d) It is excessively costly for one party to develop all the necessary expertise to carry
out all the activities itself
e) All of the above
Consolidation of managers often occurs due to which of the following?
a) Increased compensation for senior managers
b) Lower costs in the vertical supply chain
c) Mergers and acquisitions
d) Increased political power of senior managers
e) Social prominence of middle magaers
What was the cause of Walmart’s exit from the German market?
a) Loss of a predatory pricing lawsuit
b) High tariffs on imported goods
c) Total revenue that failed to cover sunk costs
d) German regulations against foreign owned firms
e) None of the above
Which of the following is true about culture?
a) Culture increases agency costs
b) Culture reduces bargaining costs
c) Culture reduces transactions costs
d) Culture increases economic costs
e) culture has no effect on costs
Which of the following is an exit barrier for firms in an industry?
a) Sunk costs
b) Labor agreements or commitments to purchase raw materials
c) Obligations to input suppliers
d) Government restrictions
e) All of the above
Which of the following is generally thought of as a supplier in the hospital industry?
a) Medicaid
b) Admitting physicians
c) Hospital-based physician
d) Patients
e) Medicare
Which of the following best describes the term, internal rivalry?
a) Divisions competing within a firm for resources
b) Differing product lines from one manufacturer competing
c) Firms jockeying for share within a market.
d) Firms competing for resources to produce goods
e) Suppliers dividing factors between competing firms
Which of the following best describes tapered integration?
a) A manufacturer produces some of all input quantity itself
b) A manufacturer purchases all input quantity from independent firms
c) A manufacturer produces some of an input quantity itself and purchases the
remaining portion from independent firms
d) A manufacturer produces some of all input quantity from its competitors
e) None of the above
Which of the following is another term for “teaching to the test?”
a) Sample bias
b) Test variance
c) Teaching discrimination
d) Multitasking
e) None of the above
What kind of competition is generally described as price competition?
a) Bertrand competition
b) Cournot competition
c) Perfect competition
d) Chamberlin competition
e) Monopolistic competition
What is a reason that companies might want to “buy” instead of “make” talent from the
market when looking to acquire employees with a particular skill set?
a) External training methods are better than internal ones
b) Companies are always willing to pay more for external employees
c) External training is more advanced (up-to-date) than internal
d) Scale economies can result in fixed education costs while in house education
methods may be more expensive
e) Externally trained employees are more likely to become better business leaders
What term best defines a complex set of behavior patterns that Nelson and Winter view
the actions of firms to be a result of?
a) Routines
b) Decisions
c) Heuristics
d) Relationships
e) Resolutions
What does it mean for a manufacturing firm to vertically integrate?
a) Expand using established product technologies to offer a wider variety of products
b) Reorganize management into semi-autonomous divisions
c) Produce raw materials and distribute finished goods on their own
d) Geographic distance between buyers and sellers
e) Use management consultants to optimize processes
Which of the following terms best describes a place in which a firm can sell its ideas for
full value?
a) Market for ideas
b) Community of ideas
c) Innovation market
d) Patent market
e) Idea environment
Which of the following best describes marginal revenue?
a) How sales revenue varies as a function of how much product is sold
b) The incremental sales from producing one more unit of output
c) Rate of change in total revenue that results from the sale of ΔQ additional units of
output
d) The total sales for a given product based on plant output
e) Percentage change in quantity divided by percentage change in price
What is the accounting concept of inventory turnover as developed by Sears in the late
19th century?
a) To systemize and circulate credit information
b) To manage the requirements of operating efficiencies
c) To publicly disclose the details of a firm’s operations
d) To present the payment of dividends out of profits
e) To link profits to fluctuations in sales volume
When is predatory pricing a most effective entry barrier?
a) When the incumbent has incurred them and the entrant has not
b) When incumbents have long-standing relationships with suppliers and customers
c) When channels are few and hard to replicate
d) When a firm has a reputation for toughness or competes in multiple markets
e) When marginal costs are low and flooding the market causes large price reductions
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
Who are the most powerful suppliers in professional sports?
a) Players unions
b) Referees
c) Owners
d) Politicians
e) Cities