Which of the following is an example of a market where barometric price leadership
occurs?
a) Breakfast cereal
b) Prime-rate loan
c) Tobacco
d) Steel until 1960s
e) Fast food hamburger
Which of the following is least likely a characteristic of profit persistence in an
industry?
a) Entry barriers exist
b) Economic profits should quickly converge to zero
c) Barriers to imitation exist
d) Firms earning above-average profits today should continue to do so in the future
e) Low profit firms today should remain low-profit firms in the future
Which of the following statements is least true regarding the views of strategy that
Nelson and Winter offer differing from Chandler?
a) Their views state that strategy and structure evolve from local interactions of the firm
with its environment rather than from top managers formulating and implementing a
comprehensive reorganization
b) Their views suggest that the relationship of the firm to the environment, as well as
the current patterns of interpersonal relationships generally referred to as the firm’s
‘structure,” are both the cumulative result of a long series of adaptations
c) Their views state that strategy and structure are examples of high level heuristics
d) Their views suggest that structure is a set of principles or guidelines for coordinating
a firm’s decisions in a manner inconsistent with its activities in the environment
e) Their views suggest that strategy is a set of principles or decision guidelines that
managers use to foster a firm’s survival and profitability
What type of strategy seeks to serve all customer groups in the market by offering a full
line of related products?
a) Generic strategy
b) Margin strategy
c) Focus strategy
d) Share strategy
e) Broad-coverage strategy
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 terms refers to the practice whereby an incumbent firm
discourages entry by charging a low price before entry occurs?
a) Limit pricing
b) Price leading
c) Predatory pricing
d) Quality pricing
e) Capacity expansion
Which of the following modes of task interdependence exists when two or more
positions are not directly dependent on each other but are associated through their
independent contributions to the success of the firm?
a) Technology interdependence
b) Environment interdependence
c) Reciprocal interdependence
d) Sequential interdependence
e) Pooled interdependence
Under what circumstance would it be logical to leave contracts vague and open-ended?
a) When performance may be ambiguous or difficult to measure.
b) When one of the firms in the contract is much larger than the other firm
c) If there are many other firms that can provide the same service or product
d) When the cost of writing the contract is too high
e) If the smaller of the two contracting firms is the upstream firm
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 entity as a supplier has the most substantial power over manufacturers in the
commercial aircraft market?
a) Raw materials suppliers
b) Airlines
c) Aircraft leasing companies
d) Unions
e) Passengers
Which of the following is not a barrier to entry in professional sports markets?
a) Each league has rules governing the addition of new franchises
b) Potential new owners must pay current owners hundreds of millions of dollars
c) Most potential owners must offer to build new stadiums
d) Incumbent teams have rights to veto franchises in their own geographic markets
e) Because the number of potential billionaire owners has risen dramatically, the
purchase prices have dropped
What is defined by the number and size distribution of the firms in a market?
a) Herfindahl index
b) Market share
c) Market structure
d) SSNIP
e) Numbers-equivalent of firms
Suppose a factory is producing 100 units and the price of each unit is $10. If raising the
price to $12 per unit results in a drop in sales of 12 units, what is the price elasticity of
demand, ·?
a) 6
b) .6
c) 1.67
d) .8
e) .17
If a firm enjoys lower costs due to a complex labor-intensive process, which of the
following statements would then be true?
a) Cutbacks in volume will always raise unit costs
b) The firm is unconcerned with labor turnover
c) An example of this process could be the practice of anti-trust law
d) The firm’s average cost rises due to moving down the learning curve
e) The process is likely a repetitive manufacturing process such as two-piece aluminum
can manufacturing
Which of the following has a downstream relationship with a Toyota Motor
Corporation?
a) Steel manufacturers
b) Tire companies
c) Dealerships
d) Paint producer
e) Car parts manufacturer
What type of good is one whose quality is relatively easy to evaluate before purchase?
a) Consumer packaged good
b) Search good
c) Experience good
d) Automobile
e) Appliance
Which of the following statements about “flat” organizations is least true?
a) Flat organizations emphasize long-term compensation rather than current pay from
salary or bonus
b) The “prize” associated with promotion appears to be greater at flat organizations
compared to tall ones
c) In a flat organization, there are fewer direct reports to a group head than in a taller
firm
d) Delegating more decision making as in a flat organization might be attractive when
the competitive environment is hostile
e) Flat organizations tend to have more divisions than their taller firm counterparts
What does Gary Miller identify as the focus for actors around which a consensus can
form within an organization?
a) Contracts
b) Incentives
c) Formal controls
d) Norms and Social conventions (culture)
e) Exclusive deals
Which of the following is the weakest an example of a ‘shock’?
a) Contracting to use another firm’s proprietary process
b) Product Innovations
c) Discoveries of new sources of consumer value or market segments
d) Shifts in demand
e) Changes in public policy that enables firms to significantly shift their strategic
position in a business