Question 1

What are the two types of barriers to entry?

Accepted Answer

A)  Legal and strategic 
B)  Price and Size 
C)  Structural and strategic 
D)  Size and Legal 
E)  Price and Structure 
A)  Legal and strategic 
B)  Price and Size 
C)  Structural and strategic 
D)  Size and Legal 
E)  Price and Structure C

Question 2

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 3

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 A

Question 4

What term describes a market where a monopolist cannot raise price above long run average cost?

Accepted Answer

A)  Blockaded 
B)  Perfectly contestable 
C)  Accommodated 
D)  Deterred 
E)  Predatory 
A)  Blockaded 
B)  Perfectly contestable 
C)  Accommodated 
D)  Deterred 
E)  Predatory

Question 5

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 6

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 7

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 8

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 9

What is the term defined as the withdrawal of a product from a market?

Accepted Answer

A)  Shut-down 
B)  Exit 
C)  Sale 
D)  Removal 
E)  Withdrawal 
A)  Shut-down 
B)  Exit 
C)  Sale 
D)  Removal 
E)  Withdrawal

Question 10

Which of the following generally accompanies firms that survive as market entrants?

Accepted Answer

A)  Precipitous growth 
B)  Lower marginal costs than incumbents 
C)  Higher average revenue than incumbents 
D)  Small size allowing fast decision making 
E)  None of the above 
A)  Precipitous growth 
B)  Lower marginal costs than incumbents 
C)  Higher average revenue than incumbents 
D)  Small size allowing fast decision making 
E)  None of the above

Question 11

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 12

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 13

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

Question 14

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 15

Which of the following firms maintains a monopoly or cartel by controlling essential inputs thus creating a barrier to entry?

Accepted Answer

A)  DeBeers in diamonds 
B)  Nike in shoes 
C)  Pepsi in beverages 
D)  Subway in sandwich fast food 
E)  Levis in denim jeans 
A)  DeBeers in diamonds 
B)  Nike in shoes 
C)  Pepsi in beverages 
D)  Subway in sandwich fast food 
E)  Levis in denim jeans

Question 16

Which of the following conditions may make predatory pricing by incumbents rational?

Accepted Answer

A)  When entry costs are very high 
B)  When entrants are uncertain about market conditions 
C)  When existing firms have significant coast advantages 
D)  When entrants are required to obtain extensive licensing and regulatory approvals 
E)  When exiting firms have increasing marginal revenue 
A)  When entry costs are very high 
B)  When entrants are uncertain about market conditions 
C)  When existing firms have significant coast advantages 
D)  When entrants are required to obtain extensive licensing and regulatory approvals 
E)  When exiting firms have increasing marginal revenue

Question 17

What was the cause of Walmart's exit from the German market?

Accepted Answer

A)  Loss of a predatory pricing lawsuit 
B)  High tariffs on imported goods 
C)  Total revenue that failed to cover sunk costs 
D)  German regulations against foreign owned firms 
E)  None of the above 
A)  Loss of a predatory pricing lawsuit 
B)  High tariffs on imported goods 
C)  Total revenue that failed to cover sunk costs 
D)  German regulations against foreign owned firms 
E)  None of the above

Question 18

What term represents the conduct and performance of firms in the market after entry has occurred?

Accepted Answer

A)  Postentry competition 
B)  Postentry actions 
C)  Postentry procedures 
D)  Postentry diversification 
E)  Postentry strategic decisions 
A)  Postentry competition 
B)  Postentry actions 
C)  Postentry procedures 
D)  Postentry diversification 
E)  Postentry strategic decisions

Question 19

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 20

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

What are the two types of barriers to entry?

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

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

What term describes a market where a monopolist cannot raise price above long run average cost?

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

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

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

When is predatory pricing a most effective entry barrier?

What is the term defined as the withdrawal of a product from a market?

Which of the following generally accompanies firms that survive as market entrants?

When is reputation a most effective entry barrier?

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

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

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

Which of the following firms maintains a monopoly or cartel by controlling essential inputs thus creating a barrier to entry?

Which of the following conditions may make predatory pricing by incumbents rational?

What was the cause of Walmart's exit from the German market?

What term represents the conduct and performance of firms in the market after entry has occurred?

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

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)?

The Power of Principles: an Historical Perspective

Economies of Scale and Scope

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters

Exam 6: Entry and Exit

What are the two types of barriers to entry?

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

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

What term describes a market where a monopolist cannot raise price above long run average cost?

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

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

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

When is predatory pricing a most effective entry barrier?

What is the term defined as the withdrawal of a product from a market?

Which of the following generally accompanies firms that survive as market entrants?

When is reputation a most effective entry barrier?

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

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

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

Which of the following firms maintains a monopoly or cartel by controlling essential inputs thus creating a barrier to entry?

Which of the following conditions may make predatory pricing by incumbents rational?

What was the cause of Walmart's exit from the German market?

What term represents the conduct and performance of firms in the market after entry has occurred?

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

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)?

The Power of Principles: an Historical Perspective

Economies of Scale and Scope

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters