Which of the following would not be a characteristic of a good with an elastic demand?
a) The product lacks unique features that differentiate it from competing products
b) The product is a high percentage of a consumer’s total expenditures
c) The good is an input used to make a product that is sensitive to changes in price
d) There are many substitutes available for the good
e) The product has high switching costs
What type of cooperation-inducing strategy is defined as one so compelling that that a
firm would expect all other firms to adopt it?
a) Backward induction
b) Focal point
c) Always aggress
d) Coordination
e) Folk
Which of the following is a reason other than concentration that price-cost margins may
vary across industries?
a) Accounting practices
b) Regulation
c) Product differentiation
d) Nature of sales transactions
e) All of the above
What variant of the multidivisional structure whose units cross national boundaries do
Kogut and Zander argue is superior at transferring specific types of knowledge across
national boundaries?
a) Subsidiary
b) Holding Company
c) Conglomerate
d) Partnership
e) Multinational corporation
Which of the following would be the range of elasticity for a product with an ‘inelastic’
demand?
a) h < 1
h = 1
c) h > 1
d) h > 2
e) none of the above
Which of the following terms describes a phenomenon whereby individuals ignore their
own information about the best course of action and instead simply do what everyone
else is doing?
a) Relative performance
b) Absolute performance
c) Herding
d) Risk sharing
e) Pay-for-performance
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
Products for which consumers cannot easily evaluate quality even after purchasing and
using the product are called:
a) Experience goods
b) Search goods
c) Retail goods
d) Consumer goods
e) Credence Goods
What caused railway transportation to remain the primary transportation source over
trucking until World War II?
a) The country lacked of an interstate highway system
b) Rail consolidation was more extensive
c) Rail was faster, safer and more reliable
d) Railroads could carry goods a further distance
e) Companies preferred rail transportation for their goods
Substitutes erode profits because of which of the following factor?
a) Substitutes compete for similar inputs driving up production costs
b) Substitutes divide demand and drive up internal rivalry
c) Firms producing substitutes use similar worker skills dividing the labor pool
d) Manufacturers of substitutes enter markets later and have lower sunk costs
e) None of the above
Which of the following is not a condition under which an incumbent firm can
successfully deter entry by holding excess capacity?
a) The investment in excess capacity must be sunk prior to entry
b) The incumbent should have a sustainable cost advantage
c) Market demand growth should be slow
d) The potential entrant should not itself be attempting to establish a reputation for
toughness
e) The excess capacity investment must be recoverable prior to entry