Question 1

Which of the following is not generally a potential benefit of diversification?

Accepted Answer

A) Control systems rewarding/penalizing division managers based on business unit objective 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms 
A) Control systems rewarding/penalizing division managers based on business unit objective 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms

Question 2

What is the approximate observed median learning curve slope for typical firms?

Accepted Answer

A) 0.6 
B) 0.7 
C) 0.8 
D) 0.9 
E) 1.0 
A) 0.6 
B) 0.7 
C) 0.8 
D) 0.9 
E) 1.0

Question 3

Increased economies of scale and scope are helped by which of the following?

Accepted Answer

A) Umbrella branding 
B) Market branding 
C) Bundling 
D) Negotiated branding 
E) Strategic branding 
A) Umbrella branding 
B) Market branding 
C) Bundling 
D) Negotiated branding 
E) Strategic branding

Question 4

Which of the following is a characteristic of economies of scale?

Accepted Answer

A) The average cost declines as output increases 
B) The average cost increases as output increases 
C) The average cost remains constant as output increases 
D) The average costs are cheaper when a firm produces a wider variety of goods 
E) The average cost curve takes the form of a U-shape 
A) The average cost declines as output increases 
B) The average cost increases as output increases 
C) The average cost remains constant as output increases 
D) The average costs are cheaper when a firm produces a wider variety of goods 
E) The average cost curve takes the form of a U-shape

Question 5

Which of the following is not a product specific fixed cost?

Accepted Answer

A) The cost to manufacture a special die to make an aircraft fuselage 
B) The cost of developing graphics software to facilitate video game development 
C) The cost of a one-week training program preceding the implementation of a specific management initiative 
D) The time and expense required to set up a textbook before printing it 
E) The cost of administrative expenses 
A) The cost to manufacture a special die to make an aircraft fuselage 
B) The cost of developing graphics software to facilitate video game development 
C) The cost of a one-week training program preceding the implementation of a specific management initiative 
D) The time and expense required to set up a textbook before printing it 
E) The cost of administrative expenses

Question 6

Which of the following best describes economies of scope?

Accepted Answer

A) The average cost declines as output increases 
B) The average cost increases as output increases 
C) The average cost remains constant as output increases 
D) Savings are achieved when a firm produces a wider variety of goods 
E) Savings are achieved when a firm produces a decreased variety of goods 
A) The average cost declines as output increases 
B) The average cost increases as output increases 
C) The average cost remains constant as output increases 
D) Savings are achieved when a firm produces a wider variety of goods 
E) Savings are achieved when a firm produces a decreased variety of goods

Question 7

Which of the following benefits of diversification explains the idea that corporate diversification can provide situations where an acquiring firm determines the stock price for firm they intend to acquire is too low?

Accepted Answer

A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms 
A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms

Question 8

What is the minimum efficient scale (MES)of production?

Accepted Answer

A) The point on an average cost curve where the cost per unit begins to decline more rapidly 
B) The minimum point on a U-shaped average cost curve 
C) The minimum level of production at a plant for it to be considered profitable 
D) The level of production for a small sized plant 
E) The threshold at which capacity is constraining for a firm's production 
A) The point on an average cost curve where the cost per unit begins to decline more rapidly 
B) The minimum point on a U-shaped average cost curve 
C) The minimum level of production at a plant for it to be considered profitable 
D) The level of production for a small sized plant 
E) The threshold at which capacity is constraining for a firm's production

Question 9

Which of the following benefits of diversification explains the idea that combining unrelated businesses can allow firms to finance projects through cross-subsidization when they previously were unable to finance the same projects externally?

Accepted Answer

A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms 
A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms

Question 10

Which of the following is not a reason a supplier might seek to sell in bulk?

Accepted Answer

A) Each sale incurs a fixed cost in writing a contract 
B) The purchaser is likely to switch over a small price due to the gains over the large number of units ordered 
C) Each sale involves setting up a different production run 
D) The cost of delivery is a fixed on a per unit basis 
E) The supplier fears uneven sales 
A) Each sale incurs a fixed cost in writing a contract 
B) The purchaser is likely to switch over a small price due to the gains over the large number of units ordered 
C) Each sale involves setting up a different production run 
D) The cost of delivery is a fixed on a per unit basis 
E) The supplier fears uneven sales

Question 11

If a firm enjoys lower costs due to a complex labor-intensive process,which of the following statements would then be true?

Accepted Answer

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 
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

Question 12

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Accepted Answer

A) Legal department 
B) Corporate board 
C) Mergers and acquisitions program 
D) Firm bonus schedule 
E) Corporate governance 
A) Legal department 
B) Corporate board 
C) Mergers and acquisitions program 
D) Firm bonus schedule 
E) Corporate governance

Question 13

Which of the following benefits of diversification explains the idea that a firm with many business lines can reduce swings in value because it receives only a small percentage of its revenue from any one of those business lines?

Accepted Answer

A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms 
A) Use of internal capital markets 
B) Economies of scale and scope 
C) Economizing on transaction costs 
D) Diversifying shareholder portfolios 
E) Identifying undervalued firms

Question 14

Which of the following is not a way managers generally benefit from acquisitions?

Accepted Answer

A) Increased compensation 
B) Consolidation of other senior executives 
C) Shielding against risk 
D) Political power 
E) Social prominence 
A) Increased compensation 
B) Consolidation of other senior executives 
C) Shielding against risk 
D) Political power 
E) Social prominence

Which of the following is not generally a potential benefit of diversification?

What is the approximate observed median learning curve slope for typical firms?

Increased economies of scale and scope are helped by which of the following?

Which of the following is a characteristic of economies of scale?

Which of the following is not a product specific fixed cost?

Which of the following best describes economies of scope?

Which of the following benefits of diversification explains the idea that corporate diversification can provide situations where an acquiring firm determines the stock price for firm they intend to acquire is too low?

What is the minimum efficient scale (MES)of production?

Which of the following benefits of diversification explains the idea that combining unrelated businesses can allow firms to finance projects through cross-subsidization when they previously were unable to finance the same projects externally?

Which of the following is not a reason a supplier might seek to sell in bulk?

If a firm enjoys lower costs due to a complex labor-intensive process,which of the following statements would then be true?

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Which of the following benefits of diversification explains the idea that a firm with many business lines can reduce swings in value because it receives only a small percentage of its revenue from any one of those business lines?

Which of the following is not a way managers generally benefit from acquisitions?

The Power of Principles: A Historical Perspective

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

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

Economics Primer

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Exam 2: The Horizontal Boundaries of the Firm

Which of the following is not generally a potential benefit of diversification?

What is the approximate observed median learning curve slope for typical firms?

Increased economies of scale and scope are helped by which of the following?

Which of the following is a characteristic of economies of scale?

Which of the following is not a product specific fixed cost?

Which of the following best describes economies of scope?

Which of the following benefits of diversification explains the idea that corporate diversification can provide situations where an acquiring firm determines the stock price for firm they intend to acquire is too low?

What is the minimum efficient scale (MES)of production?

Which of the following benefits of diversification explains the idea that combining unrelated businesses can allow firms to finance projects through cross-subsidization when they previously were unable to finance the same projects externally?

Which of the following is not a reason a supplier might seek to sell in bulk?

If a firm enjoys lower costs due to a complex labor-intensive process,which of the following statements would then be true?

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Which of the following benefits of diversification explains the idea that a firm with many business lines can reduce swings in value because it receives only a small percentage of its revenue from any one of those business lines?

Which of the following is not a way managers generally benefit from acquisitions?

The Power of Principles: A Historical Perspective

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

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

Economics Primer

Filters