Question 1

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

Accepted Answer

A)  fixed cost of production 
B)  fixed cost of supply 
C)  fixed cost of demand 
D)  fixed cost of scale 
A)  fixed cost of production 
B)  fixed cost of supply 
C)  fixed cost of demand 
D)  fixed cost of scale

Question 2

When do economies of scope come into existence?

Accepted Answer

Economies of scope exist when

Question 3

VisionZed Inc., a computer software company, spends a lot of finances on research.It tries to implement the latest technologies available and provides services that are matchless when compared to any of its competitors.At the same time, Xtron Technologies Corp., another computer software company, pays half the price that VisionZed pays on research as it combines the intelligence of different software companies and creates its product.This enables Xtron to have a cost advantage over VisionZed.Xtron Technologies Corp.is an example of a company that eliminates steps in the _____.

Accepted Answer

A)  supply chain 
B)  growth chain 
C)  value chain 
D)  pricing chain 
A)  supply chain 
B)  growth chain 
C)  value chain 
D)  pricing chain

Question 4

Which of the following statements is true of research and development (R&D)?

Accepted Answer

A)  Small volumes of production enable firms to spread the cost of research and development (R&
D) , advertising, and general and administrative expenses. 
B)  The higher a firm's R&D costs, the more the scope for the company to expand globally allowing costs to be spread across more customers. 
C)  Adding R&D allows a firm to have a cost advantage over competitors. 
D)  Eliminating R&D helps firms to lead in launching new product designs. 
A)  Small volumes of production enable firms to spread the cost of research and development (R&
D) , advertising, and general and administrative expenses. 
B)  The higher a firm's R&D costs, the more the scope for the company to expand globally allowing costs to be spread across more customers. 
C)  Adding R&D allows a firm to have a cost advantage over competitors. 
D)  Eliminating R&D helps firms to lead in launching new product designs.

Question 5

Taurus Inc.usually produces 5,000 handcrafted products in a day.Recently, the demand for handcrafted products drastically increased as one of its products became a popular item for home décor.Due to this increase, the company had to up its production level to 10,000 products per day.This, however, decreased the price of individual products.This scenario best illustrates _____.

Accepted Answer

A)  economies of wealth 
B)  economies of finance 
C)  economies of scope 
D)  economies of scale 
A)  economies of wealth 
B)  economies of finance 
C)  economies of scope 
D)  economies of scale

Question 6

Trends Inc.has been awarded the best branded clothing company award for three years consecutively.The CEO of the company stated that this was possible due to the company strategically lowering the cost of each unit produced, and successfully maintaining that method in order to effectively contain finances.While comparing Trends with other similar production companies, it was found out that the company did certainly collect more profit than the others.The scenario best illustrates the:

Accepted Answer

A)  acquisition strategy. 
B)  investment strategy. 
C)  pricing strategy. 
D)  cost-management strategy. 
A)  acquisition strategy. 
B)  investment strategy. 
C)  pricing strategy. 
D)  cost-management strategy.

Question 7

Yellow Corp., a supplier that provides raw materials to a leading computer brand, had to lower its costs by 7 percent as the computer brand doubled its order.As a result, Yellow Corp.experienced economies of scale.This negotiation tactic is an example of _____.

Accepted Answer

A)  task specialization 
B)  purchasing volume 
C)  learning curves 
D)  competitive advantage 
A)  task specialization 
B)  purchasing volume 
C)  learning curves 
D)  competitive advantage

Question 8

The Finance Department of Neptune Industries has to audit expenses and profits made each year.It creates separate databases for costs accrued in the form of equipment used in the company and for other costs such as costs of accounting, rent, and managerial salaries.Which of the following is the subject of economies of scale in the described scenario?

Accepted Answer

A)  Research and development expenses 
B)  General and administrative costs 
C)  Incentives and promotional costs 
D)  Advertising expenses 
A)  Research and development expenses 
B)  General and administrative costs 
C)  Incentives and promotional costs 
D)  Advertising expenses

Question 9

Fuchsia Corp., a retail chain, opens four outlets in different locations of a city.It markets itself for attracting customers to these locations.The company invests in promotional campaigns for one of the outlets and then divides the expenses among the four outlets.Which of the following is the subject of economies of scale in the described scenario?

Accepted Answer

A)  Production costs 
B)  General costs 
C)  Research and development expenses 
D)  Advertising expenses 
A)  Production costs 
B)  General costs 
C)  Research and development expenses 
D)  Advertising expenses

Question 10

Techno Inc.is a computer hardware company that gets its computer parts from countries that manufacture them for lesser price than what its competitors pay and at a better quality.This allows Techno to save on the prices paid for the raw materials and use them to increase its production volume.Which of the following is Techno Inc.practicing in order to attain cost advantage?

Accepted Answer

A)  Transportation rates 
B)  Raw material rates 
C)  Exchange rates 
D)  Wage rates 
A)  Transportation rates 
B)  Raw material rates 
C)  Exchange rates 
D)  Wage rates

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

When do economies of scope come into existence?

Which of the following statements is true of research and development (R&D)?

Yellow Corp., a supplier that provides raw materials to a leading computer brand, had to lower its costs by 7 percent as the computer brand doubled its order.As a result, Yellow Corp.experienced economies of scale.This negotiation tactic is an example of _____.

What Is Business Strategy?

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses, and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters

Exam 4: Cost Advantage

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

When do economies of scope come into existence?

Which of the following statements is true of research and development (R&D)?

Yellow Corp., a supplier that provides raw materials to a leading computer brand, had to lower its costs by 7 percent as the computer brand doubled its order.As a result, Yellow Corp.experienced economies of scale.This negotiation tactic is an example of _____.

What Is Business Strategy?

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses, and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters