What is a key issue facing managers of the 2000s with respect to production
technology?
a) Using the technology while maintaining an adequate level of complexity vs.
simplicity
b) Balancing price of the technology with the benefits of its use
c) The choice between reformulating strategies and reorganizing or using the
technologies for incremental improvements
d) Integrating CAD/CAM into their factories
e) Ensuring all parties understand the technology
Suppose an entrepreneur starts a business earning $2M in revenue in 2009 while at the
same time incurring $1.8M in costs. If the entrepreneur’s best outside alternative
employment opportunity is to earn $300K, what are the firms accounting and economic
profits?
a) $200K, -$100K
b) $200K, $100K
c) $300K, $100K
d) $300K, -$100K
e) $200K, $200K
Which of the following is not an isolating mechanism that falls under the heading of
early-mover advantage?
a) Learning curve
b) Reputation and buyer uncertainty
c) Buyer switching costs
d) Network effects
e) Superior access to inputs or customers
What term describes a framework used in strategy based on resource heterogeneity
which posits that for a competitive advantage to be sustainable, it must be underpinned
by resource capabilities that are scarce and imperfectly mobile?
a) Persistence of profitability for the firm
b) Capability-based theory of the firm
c) Regression to the mean
d) Resource-based theory of the firm
e) Five-forces framework
Which of the following issues makes it difficult for to managers to reign in dedicated
‘cost centers’ in a firm?
a) Cost centers have no dedicated ‘customer’
b) Cost centers are easy to judge against market counterparts performing similar
functions
c) Firms are unwilling to endure the ill will generated by firing unproductive elements
in an organization
d) Firms are always looking to cut costs when they retain an advantage insulting it from
the market
e) Managers of costs centers have significant latitude to complete their jobs
Which of the following is a statistical process in which raw outcome measures are
adjusted for factors that are beyond the control of the seller?
a) Risk adjustment
b) Mean reversion
c) Score adjustment
d) Noise limiting
e) Outcome adjustment
Which of the following is least true with regard to presidential power?
a) Presidential power is the ability to influence the people who make and implement
government policies
b) Presidential power only consists of the president taking direct action on some front
c) The bargaining advantage that comes with the presidential office enables the
president to persuade others to work in his interest
d) A source of presidential power is professional reputation, which comprises the
expectations of professional politicians, bureaucrats, and others in the political
community regarding the president’s power and his willingness to use it
e) The president’s prestige among the public is a source of presidential power
What type of entry exists if (1) the incumbent can keep the entrant out by employing an
entry-deterring strategy and (2) employing the entry-deterring strategy boosts the
incumbent’s profits?
a) Deterred Entry
b) Judo Entry
c) Stealth Entry
d) Accommodated Entry
e) Blockaded Entry
Unraveling is an economic theory that describes which of the following?
a) Low quality products will be quickly discovered and abandoned by buyers
b) High seller concentration leads to the development of many substitute products
c) Few sellers improve product quality once they have scale in production
d) Even low quality sellers will disclose their product quality
e) Consumers ultimately switch products regardless of quality
Suppose we have two firms (Firm 1 & Firm 2) enter into a transaction where Firm 1 is
upstream of firm 2 in a vertical chain. What term best describes the organization of the
transaction where Firm 2 owns the assets of Firm 1?
a) Backward Integration
b) Forward integration
c) Nonintegration
d) Contractually unbound
e) Contractually bound
What is the typical ‘capacity use’ ratio as reported by plant managers to the U.S. Census
of Manufacturers annually?
a) 40%
b) 50%
c) 60%
d) 70%
e) 80%