Question 1

What type of entry exists if structural barriers are so high the incumbent need do nothing to deter entry?

Accepted Answer

A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry 
A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry E

Question 2

Which term describes the situation where a smaller firm and potential entrant can use the incumbent's size to its own advantage?

Accepted Answer

A) Jujitsu economics 
B) Karate economics 
C) Boxing economics 
D) Judo economics 
E) David and Goliath economics 
A) Jujitsu economics 
B) Karate economics 
C) Boxing economics 
D) Judo economics 
E) David and Goliath economics D

Question 3

What term describes a situation where two or more parties expend resources battling each other?

Accepted Answer

A) Predatory pricing 
B) War of attrition 
C) Dumping 
D) Capacity Expansion 
E) Puppy Dog Ploy 
A) Predatory pricing 
B) War of attrition 
C) Dumping 
D) Capacity Expansion 
E) Puppy Dog Ploy B

Question 4

How can incumbents legally erect entry barriers around novel and nonobvious products or production processes?

Accepted Answer

A) Collusive pricing 
B) Predatory pricing 
C) Patents 
D) Formation of a cartel 
E) Price fixing 
A) Collusive pricing 
B) Predatory pricing 
C) Patents 
D) Formation of a cartel 
E) Price fixing

Question 5

Which of the following is a method a monopolist firm might use to prevent entry into a market?

Accepted Answer

A) Limit pricing 
B) Predatory pricing 
C) Capacity expansion 
D) All of the above 
E) None of the above 
A) Limit pricing 
B) Predatory pricing 
C) Capacity expansion 
D) All of the above 
E) None of the above

Question 6

What situation occurs if an incumbent firm with increasing marginal costs or limited capacity sets a price just below the entrants' marginal costs even though the incumbent may be unable to meet all market demand (or possibly may have to sacrifice its profits to do so)?

Accepted Answer

A) Contestable limit pricing 
B) Strategic limit pricing 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion 
A) Contestable limit pricing 
B) Strategic limit pricing 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion

Question 7

What type of firm is one that is already operating in a particular market?

Accepted Answer

A) Market leader 
B) Entrant 
C) Incumbent 
D) Market follower 
E) Monopolist 
A) Market leader 
B) Entrant 
C) Incumbent 
D) Market follower 
E) Monopolist

Question 8

What situation occurs when a large incumbent sets a low price to drive smaller rivals from the market?

Accepted Answer

A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion 
A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion

Question 9

Which of the following methods is believed to be used by Brazilian cement makers to prevent entry into the market?

Accepted Answer

A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion 
A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion

Question 10

When is reputation a most effective entry barrier?

Accepted Answer

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 
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

Question 11

When are sunk costs a most effective entry barrier?

Accepted Answer

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 
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

Question 12

What is the typical "capacity use" ratio as reported by plant managers to the U.S.Census of Manufacturers annually?

Accepted Answer

A) 40% 
B) 50% 
C) 60% 
D) 70% 
E) 80% 
A) 40% 
B) 50% 
C) 60% 
D) 70% 
E) 80%

Question 13

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?

Accepted Answer

A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry 
A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry

Question 14

What term best describes the paradox which says despite the conclusion that predatory pricing to deter entry appears irrational,many firms are commonly perceived as slashing prices to deter entry?

Accepted Answer

A) Cloud paradox 
B) Credit paradox 
C) Entry paradox 
D) Chain-store paradox 
E) Pricing paradox 
A) Cloud paradox 
B) Credit paradox 
C) Entry paradox 
D) Chain-store paradox 
E) Pricing paradox

Question 15

Which of the following is not an exit barrier for firms in an industry?

Accepted Answer

A) Sunk costs 
B) Labor agreements or commitments to purchase raw materials 
C) Obligations to input suppliers 
D) Excess capacity 
E) Government restrictions 
A) Sunk costs 
B) Labor agreements or commitments to purchase raw materials 
C) Obligations to input suppliers 
D) Excess capacity 
E) Government restrictions

Question 16

What type of entry exists if structural entry barriers are low,and either (1)entry-deterring strategies will be ineffective or (2)the cost to the incumbent of trying to deter entry exceeds the benefits it could gain from keeping the entrant out?

Accepted Answer

A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry 
A) Deterred Entry 
B) Judo Entry 
C) Stealth Entry 
D) Accommodated Entry 
E) Blockaded Entry

Question 17

Which of the following terms refers to the practice whereby an incumbent firm discourages entry by charging a low price before entry occurs?

Accepted Answer

A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion 
A) Limit pricing 
B) Price leading 
C) Predatory pricing 
D) Quality pricing 
E) Capacity expansion

Question 18

Which of the following is a potential risk of a brand umbrella?

Accepted Answer

A) The brand umbrella reduces the incumbents sunk cost of introducing a new product 
B) The umbrella brand may help the incumbent navigate the vertical chain 
C) The brand umbrella allows an incumbent offset uncertainty about the quality of a new product 
D) A brand umbrella may make suppliers and distributors more willing to enter relationship specific investments in or sell credit to incumbents 
E) If a new product under the umbrella fails, consumers may become disenchanted with the entire brand 
A) The brand umbrella reduces the incumbents sunk cost of introducing a new product 
B) The umbrella brand may help the incumbent navigate the vertical chain 
C) The brand umbrella allows an incumbent offset uncertainty about the quality of a new product 
D) A brand umbrella may make suppliers and distributors more willing to enter relationship specific investments in or sell credit to incumbents 
E) If a new product under the umbrella fails, consumers may become disenchanted with the entire brand

Question 19

When is predatory pricing a most effective entry barrier?

Accepted Answer

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 
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

Question 20

Which of the following is not a condition under which an incumbent firm can successfully deter entry by holding excess capacity?

Accepted Answer

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 
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

What type of entry exists if structural barriers are so high the incumbent need do nothing to deter entry?

Which term describes the situation where a smaller firm and potential entrant can use the incumbent's size to its own advantage?

What term describes a situation where two or more parties expend resources battling each other?

How can incumbents legally erect entry barriers around novel and nonobvious products or production processes?

Which of the following is a method a monopolist firm might use to prevent entry into a market?

What situation occurs if an incumbent firm with increasing marginal costs or limited capacity sets a price just below the entrants' marginal costs even though the incumbent may be unable to meet all market demand (or possibly may have to sacrifice its profits to do so)?

What type of firm is one that is already operating in a particular market?

What situation occurs when a large incumbent sets a low price to drive smaller rivals from the market?

Which of the following methods is believed to be used by Brazilian cement makers to prevent entry into the market?

When is reputation a most effective entry barrier?

When are sunk costs a most effective entry barrier?

What is the typical "capacity use" ratio as reported by plant managers to the U.S.Census of Manufacturers annually?

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?

What term best describes the paradox which says despite the conclusion that predatory pricing to deter entry appears irrational,many firms are commonly perceived as slashing prices to deter entry?

Which of the following is not an exit barrier for firms in an industry?

What type of entry exists if structural entry barriers are low,and either (1)entry-deterring strategies will be ineffective or (2)the cost to the incumbent of trying to deter entry exceeds the benefits it could gain from keeping the entrant out?

Which of the following terms refers to the practice whereby an incumbent firm discourages entry by charging a low price before entry occurs?

Which of the following is a potential risk of a brand umbrella?

When is predatory pricing a most effective entry barrier?

Which of the following is not a condition under which an incumbent firm can successfully deter entry by holding excess capacity?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters

Exam 11: Entry and Exit

What type of entry exists if structural barriers are so high the incumbent need do nothing to deter entry?

Which term describes the situation where a smaller firm and potential entrant can use the incumbent's size to its own advantage?

What term describes a situation where two or more parties expend resources battling each other?

How can incumbents legally erect entry barriers around novel and nonobvious products or production processes?

Which of the following is a method a monopolist firm might use to prevent entry into a market?

What situation occurs if an incumbent firm with increasing marginal costs or limited capacity sets a price just below the entrants' marginal costs even though the incumbent may be unable to meet all market demand (or possibly may have to sacrifice its profits to do so)?

What type of firm is one that is already operating in a particular market?

What situation occurs when a large incumbent sets a low price to drive smaller rivals from the market?

Which of the following methods is believed to be used by Brazilian cement makers to prevent entry into the market?

When is reputation a most effective entry barrier?

When are sunk costs a most effective entry barrier?

What is the typical "capacity use" ratio as reported by plant managers to the U.S.Census of Manufacturers annually?

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?

What term best describes the paradox which says despite the conclusion that predatory pricing to deter entry appears irrational,many firms are commonly perceived as slashing prices to deter entry?

Which of the following is not an exit barrier for firms in an industry?

What type of entry exists if structural entry barriers are low,and either (1)entry-deterring strategies will be ineffective or (2)the cost to the incumbent of trying to deter entry exceeds the benefits it could gain from keeping the entrant out?

Which of the following terms refers to the practice whereby an incumbent firm discourages entry by charging a low price before entry occurs?

Which of the following is a potential risk of a brand umbrella?

When is predatory pricing a most effective entry barrier?

Which of the following is not a condition under which an incumbent firm can successfully deter entry by holding excess capacity?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters