Question 1

Successful invention and innovation in the marketplace:

Accepted Answer

A)  can create value and is easy to capture. 
B)  cannot create value and is difficult to capture. 
C)  can create value but is often difficult to capture. 
D)  is not important to most company's strategy. 
A)  can create value and is easy to capture. 
B)  cannot create value and is difficult to capture. 
C)  can create value but is often difficult to capture. 
D)  is not important to most company's strategy.

Question 2

Putting together two goods - shaving cream and razors - to increase value is using the power of:

Accepted Answer

A)  complementary goods. 
B)  substitute goods. 
C)  unrelated goods. 
D)  technologically advanced goods. 
A)  complementary goods. 
B)  substitute goods. 
C)  unrelated goods. 
D)  technologically advanced goods.

Question 3

Degree of rivalry is:

Accepted Answer

A)  high when excess capacity of existing firms is low. 
B)  low when fixed costs of existing firms are high. 
C)  high when fixed costs of existing firms are low. 
D)  high when fixed costs of existing firms are high. 
A)  high when excess capacity of existing firms is low. 
B)  low when fixed costs of existing firms are high. 
C)  high when fixed costs of existing firms are low. 
D)  high when fixed costs of existing firms are high.

Question 4

What happens to producer surplus and consumer surplus if transactions costs are reduced?

Accepted Answer

Consumer-borne transaction costs reduce

Question 5

Strategy refers to the general policies that managers adopt to increase:

Accepted Answer

A)  costs. 
B)  the number of customers at the same price. 
C)  the rate of technological change. 
D)  the generation of profits. 
A)  costs. 
B)  the number of customers at the same price. 
C)  the rate of technological change. 
D)  the generation of profits.

Question 6

The fast food industry from Back Yard Burgers to KFC promises good food delivered quickly. The value of the consumer's time:

Accepted Answer

A)  is less important than productions costs. 
B)  is a key component in creating value for the firm and the consumer. 
C)  is usually so low that fast food is unimportant in the marketplace. 
D)  must be discounted to make sure it is negative. 
A)  is less important than productions costs. 
B)  is a key component in creating value for the firm and the consumer. 
C)  is usually so low that fast food is unimportant in the marketplace. 
D)  must be discounted to make sure it is negative.

Question 7

Paul Romer argues that "what underlies this process [economic success] ...... are instructions, formulas, recipes, and methods of doing things." He is referring to the:

Accepted Answer

A)  hardware or tangible assets. 
B)  software or intangible assets. 
C)  wetware or soup recipes. 
D)  hardware or human resources. 
A)  hardware or tangible assets. 
B)  software or intangible assets. 
C)  wetware or soup recipes. 
D)  hardware or human resources.

Question 8

What is the relation between value creation and transactions cost?

Accepted Answer

Value is created when transactions costs

Question 9

If consumers find that there are substantial transactions costs to purchasing a product, then:

Accepted Answer

A)  overall consumer demand is greater at each price. 
B)  overall consumer demand is the same at each price. 
C)  overall consumer demand is less at each price. 
D)  equilibrium price and quantity both fall. 
A)  overall consumer demand is greater at each price. 
B)  overall consumer demand is the same at each price. 
C)  overall consumer demand is less at each price. 
D)  equilibrium price and quantity both fall.

Question 10

Manufacturers of printers and computers set prices independently. This means that they:

Accepted Answer

A)  do not consider the positive effect that their lower prices have on the other's profit. 
B)  do not consider the negative effect that their lower prices have on the other's profit. 
C)  do not consider the positive effect that their higher prices have on the other's profit. 
D)  do not consider the negative effect that their higher prices have on the other's profit. 
A)  do not consider the positive effect that their lower prices have on the other's profit. 
B)  do not consider the negative effect that their lower prices have on the other's profit. 
C)  do not consider the positive effect that their higher prices have on the other's profit. 
D)  do not consider the negative effect that their higher prices have on the other's profit.

Question 11

Setting up of outlet malls in rural highways is an example of:

Accepted Answer

A)  increased consumer transactions cost. 
B)  increased producer transactions cost. 
C)  reduced consumer transactions cost. 
D)  reduced producer transactions cost. 
A)  increased consumer transactions cost. 
B)  increased producer transactions cost. 
C)  reduced consumer transactions cost. 
D)  reduced producer transactions cost.

Question 12

Economies of scope are said to exist when:

Accepted Answer

A)  one firm produces many products rather than separate firms for each. 
B)  many firms produce many products rather than one firm producing all. 
C)  many firms produce a single product rather than one firm. 
D)  one firm produces multiple products rather than separate firms producing all. 
A)  one firm produces many products rather than separate firms for each. 
B)  many firms produce many products rather than one firm producing all. 
C)  many firms produce a single product rather than one firm. 
D)  one firm produces multiple products rather than separate firms producing all.

Question 13

If transactions costs can be reduced in a marketplace, then total producer and consumer surplus will:

Accepted Answer

A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase and then decrease. 
A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase and then decrease.

Question 14

Besides barriers to entry, what are some of the other reasons for incumbents to maintain their profits.

Accepted Answer

Besides barriers to entry, the

Question 15

Many manufacturers attempt to build fairly close relationships with the firms that supply their packaging and boxes. Why?

Accepted Answer

Many manufacturers attempt to build fair

Question 16

In a competitive market, the firm has a difficult time capturing value due to the large number of rivals. But it can be successful at capturing value if the:

Accepted Answer

A)  firm's cost curves are higher than rivals. 
B)  firm's superior productivity is based on value of the whole organization. 
C)  firm's superior productivity is based on selected components of superiority within the firm. 
D)  demand for the firm's product is inelastic. 
A)  firm's cost curves are higher than rivals. 
B)  firm's superior productivity is based on value of the whole organization. 
C)  firm's superior productivity is based on selected components of superiority within the firm. 
D)  demand for the firm's product is inelastic.

Question 17

With creating value we have:

Accepted Answer

A)  a shift in both the demand and supply curves to the right. 
B)  a shift in both the demand and supply curves to the left. 
C)  demand shift to the right and supply to the left. 
D)  demand shift to the left and supply to the right. 
A)  a shift in both the demand and supply curves to the right. 
B)  a shift in both the demand and supply curves to the left. 
C)  demand shift to the right and supply to the left. 
D)  demand shift to the left and supply to the right.

Question 18

In a corporation, one important source of value is that 'whole organization' is worth more than the sum of its parts. This is called:

Accepted Answer

A)  team production capabilities. 
B)  collective cost analysis benefits. 
C)  complementary goods value creation. 
D)  substitute goods value creation. 
A)  team production capabilities. 
B)  collective cost analysis benefits. 
C)  complementary goods value creation. 
D)  substitute goods value creation.

Question 19

Draw supply and demand for a product showing the equilibrium price and quantity. Illustrate what would happen if all the transactions costs of market were reduced. Generally, what is the impact of transactions costs on the operation of the marketplace?

Accepted Answer

@#IMG-DLM& The dashed supply and demand curves ill

Question 20

Since September 11, 2001, longer lines, longer airport waits, and limits on carry-on luggage have all contributed to:

Accepted Answer

A)  an increase vacation air travel. 
B)  an increase in business air travel. 
C)  a decline in value of air travel. 
D)  an increase in value of air travel. 
A)  an increase vacation air travel. 
B)  an increase in business air travel. 
C)  a decline in value of air travel. 
D)  an increase in value of air travel.

Exam 8: Economics of Strategy: Creating and Capturing Value

Successful invention and innovation in the marketplace:

Putting together two goods - shaving cream and razors - to increase value is using the power of:

Degree of rivalry is:

What happens to producer surplus and consumer surplus if transactions costs are reduced?

Strategy refers to the general policies that managers adopt to increase:

The fast food industry from Back Yard Burgers to KFC promises good food delivered quickly. The value of the consumer's time:

Paul Romer argues that "what underlies this process [economic success] ...... are instructions, formulas, recipes, and methods of doing things." He is referring to the:

What is the relation between value creation and transactions cost?

If consumers find that there are substantial transactions costs to purchasing a product, then:

Manufacturers of printers and computers set prices independently. This means that they:

Setting up of outlet malls in rural highways is an example of:

Economies of scope are said to exist when:

If transactions costs can be reduced in a marketplace, then total producer and consumer surplus will:

Besides barriers to entry, what are some of the other reasons for incumbents to maintain their profits.

Many manufacturers attempt to build fairly close relationships with the firms that supply their packaging and boxes. Why?

In a competitive market, the firm has a difficult time capturing value due to the large number of rivals. But it can be successful at capturing value if the:

With creating value we have:

In a corporation, one important source of value is that 'whole organization' is worth more than the sum of its parts. This is called:

Draw supply and demand for a product showing the equilibrium price and quantity. Illustrate what would happen if all the transactions costs of market were reduced. Generally, what is the impact of transactions costs on the operation of the marketplace?

Since September 11, 2001, longer lines, longer airport waits, and limits on carry-on luggage have all contributed to:

Introduction

Economists View of Behavior

Markets, Organizations, and the Role of Knowledge

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters