Question 1

What is the relation between value creation and transactions cost?

Accepted Answer

Value is created when transaction costs

Question 2

The profit earned by an industry is likely to be low if the

Accepted Answer

A) industry has only a few large customers. 
B) industry has many customers. 
C) product produced in the industry has only a few substitutes. 
D) degree of rivalry among industries is low. 
A) industry has only a few large customers. 
B) industry has many customers. 
C) product produced in the industry has only a few substitutes. 
D) degree of rivalry among industries is low.

Question 3

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 production 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 production 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 4

Which of the following is a potential cost of diversification?

Accepted Answer

A) Firms become bureaucratic and more expensive to manage as they grow. 
B) The cost of production increases,thereby reducing profits earned by a firm. 
C) The supply of labor reduces,thereby reducing the level of production. 
D) Shareholders find it expensive and risky to hold a diversified portfolio. 
A) Firms become bureaucratic and more expensive to manage as they grow. 
B) The cost of production increases,thereby reducing profits earned by a firm. 
C) The supply of labor reduces,thereby reducing the level of production. 
D) Shareholders find it expensive and risky to hold a diversified portfolio.

Question 5

Let Q be the number of printer-computer combinations sold in the market and let MC of both these products equal $0.Let the demand for both the products be given as Q = 12 - (Pp + Pc),where Pp and Pc are the prices of printers and computers.What are the profits of each firm when they decide to cooperate,and what happens if they decide to go alone?

Accepted Answer

First,if they decide to cooperate,then t

Question 6

In the area of agricultural chemicals,the Environmental Protection Agency requires detailed labeling on cans of pesticides and herbicides.Generally speaking,the industry not only doesn't oppose these labeling requirements,but even supports government-sponsored education programs on how to use these chemicals.Why?

Accepted Answer

Government-sponsored education programs

Question 7

Walmart tends to have the best retailing system,the best distribution system,and the best marketing system of the modern retailers.It also dominates the marketplace for retail sales to a greater extent than any other retailer.What is the source of Walmart's ability to capture value in the marketplace?

Accepted Answer

Walmart initially had a first-mover adva

Question 8

Setting up 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 9

A firm can capture value through market power or through superior factors of production.The rent earned through the use of superior factors of production is

Accepted Answer

A) housing rent. 
B) monopoly rent. 
C) Ricardian rent. 
D) Bushian rent. 
A) housing rent. 
B) monopoly rent. 
C) Ricardian rent. 
D) Bushian rent.

Question 10

Bundling of complements to create value strategically usually leads to lower prices for the consumer,????______.

Accepted Answer

A) greater volume sold,and lower profits 
B) less volume sold,and lower profits 
C) greater volume sold,and greater profits 
D) less volume sold,and greater profits 
A) greater volume sold,and lower profits 
B) less volume sold,and lower profits 
C) greater volume sold,and greater profits 
D) less volume sold,and greater profits

Question 11

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

Accepted Answer

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

Question 12

Finding a way to create and capture value is part of

Accepted Answer

A) business strategy. 
B) cost control systems. 
C) management control,but not general management. 
D) organizational structure. 
A) business strategy. 
B) cost control systems. 
C) management control,but not general management. 
D) organizational structure.

Question 13

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 can produce multiple products at a lower cost than separate firms producing each. 
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 can produce multiple products at a lower cost than separate firms producing each.

Question 14

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

Accepted Answer

A) use capital-intensive means of production. 
B) use division of labor and specialization in production. 
C) do not consider the effect of the prices on the demand for the products. 
D) do not consider the negative effect that the high prices have on each other's profit. 
A) use capital-intensive means of production. 
B) use division of labor and specialization in production. 
C) do not consider the effect of the prices on the demand for the products. 
D) do not consider the negative effect that the high prices have on each other's profit.

Question 15

Related diversification occurs when

Accepted Answer

A) a business serves itself first before serving others. 
B) a business serves others first before serving itself. 
C) a business serves itself and allows others to serve it. 
D) a business serves itself and many other common businesses. 
A) a business serves itself first before serving others. 
B) a business serves others first before serving itself. 
C) a business serves itself and allows others to serve it. 
D) a business serves itself and many other common businesses.

Question 16

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

Accepted Answer

Beside barriers to entry,there

Question 17

Dell Computer attempts to collect information about customers before purchase and assemble customized product for the customers.This process tries to

Accepted Answer

A) reduce transaction costs for both Dell and the customer. 
B) reduce transaction costs for the customers only. 
C) increase transaction costs for Dell so that it can reduce taxable profits. 
D) increase transaction costs for customers so that IBM can also sell PCs. 
A) reduce transaction costs for both Dell and the customer. 
B) reduce transaction costs for the customers only. 
C) increase transaction costs for Dell so that it can reduce taxable profits. 
D) increase transaction costs for customers so that IBM can also sell PCs.

Question 18

Diversifying to reduce volatility is a good idea only if

Accepted Answer

A) shareholders can diversify within their own investment portfolios at low cost. 
B) firms are willing to invest in capital formation. 
C) firms account for social costs of production. 
D) shareholders are willing to pay premium for a company in order to reduce return volatility. 
A) shareholders can diversify within their own investment portfolios at low cost. 
B) firms are willing to invest in capital formation. 
C) firms account for social costs of production. 
D) shareholders are willing to pay premium for a company in order to reduce return volatility.

Question 19

Which of the following is essential for the development and implementation of strategies by a firm?

Accepted Answer

A) An understanding of the firm's resources and capabilities 
B) An understanding of the professional backgrounds of its managers 
C) Investment in physical capital 
D) A low tax rate 
A) An understanding of the firm's resources and capabilities 
B) An understanding of the professional backgrounds of its managers 
C) Investment in physical capital 
D) A low tax rate

Question 20

Successful invention and innovation in the marketplace

Accepted Answer

A) can create value and are easy to capture. 
B) cannot create value and are difficult to capture. 
C) can create value but are often difficult to capture. 
D) are not important to most company strategies. 
A) can create value and are easy to capture. 
B) cannot create value and are difficult to capture. 
C) can create value but are often difficult to capture. 
D) are not important to most company strategies.

What is the relation between value creation and transactions cost?

The profit earned by an industry is likely to be low if the

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

Which of the following is a potential cost of diversification?

Setting up outlet malls in rural highways is an example of

A firm can capture value through market power or through superior factors of production.The rent earned through the use of superior factors of production is

Bundling of complements to create value strategically usually leads to lower prices for the consumer,????______.

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

Finding a way to create and capture value is part of

Economies of scope are said to exist when

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

Related diversification occurs when

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

Dell Computer attempts to collect information about customers before purchase and assemble customized product for the customers.This process tries to

Diversifying to reduce volatility is a good idea only if

Which of the following is essential for the development and implementation of strategies by a firm?

Successful invention and innovation in the marketplace

Introduction

Economists View of Behavior

Exchange and Markets

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

Exam 8: Economics of Strategy: Creating and Capturing Value

What is the relation between value creation and transactions cost?

The profit earned by an industry is likely to be low if the

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

Which of the following is a potential cost of diversification?

Setting up outlet malls in rural highways is an example of

A firm can capture value through market power or through superior factors of production.The rent earned through the use of superior factors of production is

Bundling of complements to create value strategically usually leads to lower prices for the consumer,????______.

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

Finding a way to create and capture value is part of

Economies of scope are said to exist when

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

Related diversification occurs when

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

Dell Computer attempts to collect information about customers before purchase and assemble customized product for the customers.This process tries to

Diversifying to reduce volatility is a good idea only if

Which of the following is essential for the development and implementation of strategies by a firm?

Successful invention and innovation in the marketplace

Introduction

Economists View of Behavior

Exchange and Markets

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