Which of the following cost line items would be a fixed cost?
a) Commissions to Salespeople
b) Rent
c) Raw Materials
d) Packaging
e) Shipping/Delivery Charges
According to the GHM Theory, the choice between an in-house sales force versus
independent agents should turn on the relative importance of investments in developing
persistent clients by the agent versus list-building activities by the insurance firm. What
would GHM thus predict about the sales of whole life versus term life insurance?
a) Both would be sold by the insurance company’s in-house sales force
b) Whole life would be sold by the insurance company’s in-house sales force; term by
an independent agent
c) Whole life would be sold by an independent agent; term by the insurance company’s
in-house sales force
d) Both would be sold by an independent agent
e) An insurance company would try to “buy” the business (whole and term life
insurance) of its independent agents
Which U.S. agency is responsible for preventing anticompetitive conduct?
a) Securities and Exchange Commission
b) Department of Justice
c) Office of Fair Trading
d) Competition Commission
e) Competition Authority
Which of the following would not reduce gaming of report cards?
a) Reporting scores using simple graphics
b) Using simple composite scores
c) Making firms pay for report card results
d) Measure quality at the most aggregate level
e) risk adjust report card scores
How can incumbents legally erect entry barriers around novel and non-obvious
products or production processes?
a) Collusive pricing
b) Predatory pricing
c) Patents
d) Formation of a cartel
e) Price fixing
Of the following industries listed, which one is generally thought of as having the
highest search costs?
a) Consumer packaged goods
b) Electronics
c) Physician service
d) Automotive
e) Apparel
High quality certification in horizontally differentiated goods is aided by which of the
following?
a) Outcome based scorecards
b) Internet firms like Google and Yahoo
c) Risk adjustment
d) Mean reversion
e) Firms paying for more scorecards
If a firm can sell its product for more than its fixed costs, but not for more than its totals
costs:
a) It will shut down
b) It will lower its fixed costs
c) It will stop producing that product
d) It will continue to operate in the short run at a loss
e) It will increase its production quantity
Which of the following best describes economies of scope?
a) The average cost declines as output increases
b) The average cost increases as output increases
c) The average cost remains constant as output increases
d) Savings are achieved when a firm produces a wider variety of goods
e) Savings are achieved when a firm produces a decreased variety of goods
Under what type of strategy does a firm either offer a narrow set of varieties, serve a
narrow set of customers, or do both?
a) Generic strategy
b) Margin strategy
c) Focus strategy
d) Share strategy
e) Broad-coverage strategy
Which of the following is a reason for a firm to Buy rather than make?
a) To eliminate competition among upstream suppliers
b) Upstream firms aggregate the demands of many buyers and provide economies of
scale.
c) To prevent downstream competitors from reducing their prices
d) Tax advantages for purchasing upstream rather than making internally
e) None of the above
The concept of who gets to control resources, make decisions and allocate profits is
known as:
a) Matrix Management Outcome (MMO)
b) The Property Rights Theory (PRT)
c) Complete Contract Theory (CCT)
d) Total Production Model (TPM)
e) Resource Allocation Theory (RAT)