Economics Final

What term describes the optimal allocation of society's resources at a given point in time?

Static efficiency

Which of the following products and services do NOT depend on standards?

Books

Size, growth, and character of home demand for a firm's product are examples of what?

Demand conditions

Which of the following terms best describes a place in which a firm can sell its ideas for full value?

Market for ideas

Which of the following serves as a voluntary signal of quality?

Warrantee

What term best describes clusters of activities that a firm does especially well in comparison with other firms?

Capabilities

What term best describes assets that are more valuable when used together than when separated?

Cospecialized

Which of the following terms best describes the ability of a firm to maintain and adapt the capabilities that are the basis of its competitive advantage?

Dynamic capabilities

Which of the following is a source for horizontal differentiation?

Location

Which of the following would NOT reduce gaming of report cards?

Making firms pay for report card results

Which of the following terms describes when firms with high scores tend to have more than their share of luck in rankings?

Mean reversion

Which of the following is another term for "teaching to the test?"

Multitasking

Which of the following is measured by a report that assesses how a product is produced?

Process

Products for which consumers can easily obtain the information required to compare alternatives are called

Search goods

Which of the following terms best describes an idea, developed by Gary Hamel and C. K. Prahalad, which combines commitment to the firm's ambitions with the flexibility to change with circumstances?

Strategic stretch

What term refers to the costs incurred by buyers when they change to a different supplier?

Switching costs

When is a signal informative?

When it is more profitable for the high quality firm to offer it

Which of the following terms best describes the situation when sources of competitive advantage in an industry are being created and eroded at an increasingly rapid rate?

Hypercompetition

What type of isolating mechanisms impedes existing firms and potential entrants from duplicating the resources and capabilities that form the basis of the firm's advantage?

Impediments to imitation

What term best describes a resource that cannot "sell itself" to the highest bidder?

Imperfectly mobile

Which of the following is measured by a report card that assesses the components of a product?

Inputs

Which of the following is NOT a Legal Restriction?

Intellectual property

High quality certification in horizontally differentiated goods is aided by which of the following?

Internet firms like Google and Yahoo

Which of the following terms describes when efforts to promote improvements on one dimension of performance are confounded by changes in other dimensions of performance?

Multitasking

What product characteristic refers to the situation where consumers place higher value on a product if other consumers also use it?

Network effect

What term describes a framework used in strategy based on resource heterogeneity which posits that for a competitive advantage to be sustainable, it must be underpinned by resource capabilities that are scarce and imperfectly mobile?

Resource-based theory of the firm

What term best describes firm-specific assets such as patents and trademarks, brand-name reputation, installed base, and organizational culture?

Resources

Which of the following is a statistical process in which raw outcome measures are adjusted for factors that are beyond the control of the seller?

Risk adjustment

Which of the following is NOT an impediment to imitation?

Scale diseconomies

Motivation bias and survivor bias are most common in which of the following?

Scorecards on horizontally differentiated products

Why would a report card that measures inputs possibly lead to multitasking?

Sellers may invest only in reported inputs but scale back on unreported inputs

When consumers learn about one seller at a time it is known as a :

Sequential search

What term best refers to fundamental changes that lead to major shifts of competitive positions in a market?

Shock

When consumers learn about many products at once, it is known as

Simultaneous search

Which of the following would make an outcome report card difficult to produce?

Small sample of outcome measures

Which of the following is not an isolating mechanism that falls under the heading of early-mover advantage?

Superior access to inputs or customers

Which of the following is NOT a way in which consumers can benefit from report cards?

Good report cards lead to more advertising

Conflicts of interest in the certifier market often can lead to which of the following?

Certification bias

Why is advertising an effective signal of quality in an experience good?

Consumers believe firms that can afford to heavily advertise sell quality products

Why do consumers tend to gravitate towards non-profit firms when evaluating credence goods?

Consumers believe non-profit sellers will be less likely to skimp on quality for profit

What term best characterizes the battle between firms to innovate first?

Contracting to use another firm's proprietary process

Which of the following is the weakest an example of a "shock"?

Contracting to use another firm's proprietary process

Which of the following is NOT an example of a way a seller can increase switching costs?

Creating a product line compatible with parts that are made by other manufacturers

What term best describes when quiet periods in markets are punctuated by fundamental "shocks" or "discontinuities" that destroy old sources of advantage and replace them with new ones?

Creative destruction

Products for which consumers cannot easily evaluate quality even after purchasing and using the product are called:

Credence Goods

Which of the following is NOT a reason for customer survey bias in quality measures?

Customers often lie in consumer surveys

What term best describes a firm informing customers about a product's benefits?

Disclosure

Which of the following is a grade used to evaluate quality?

Report card

What type of isolating mechanisms increase the economic power of a competitive advantage over time once a firm has acquired that advantage?

Early-mover advantages

Which of the following is least likely a characteristic of profit persistence in an industry?

Economic profits should quickly converge to zero

Unraveling is an economic theory that describes which of the following?

Even low quality sellers will disclose their product quality

Products for which consumers cannot easily compare product characteristics and value information from others are called:

Experience goods

Which of the following terms describes a nation's position with regard to the elements (e.g. human resources, infrastructure) of production that are necessary to compete in a particular industry?

Factor conditions

Which of the following best describes the consumer's shopping problem?

Finding the seller that offers the highest value of B - P

Which of the following is measured by a report card that assesses product performance?

Outcomes

What term best describes the characteristic of a process if past circumstances could exclude certain evolutions in the future?

Path dependence

What term describes the situation where a firm does exceedingly well due to good luck or exceedingly poorly due to bad luck, but returns to normal performance following?

Regression to the mean

Which of the following terms best describes a phenomenon whereby, despite equal innovative capabilities, an entrant is willing to spend more to develop an innovation?

The replacement effect

Which of the following terms best describes a phenomenon whereby a profit-maximizing firm sticks with its current technology or product concept even though the profit-maximizing decision for a firm starting from scratch would be to choose a different technology or product concept?

The sunk cost effect

Why do consumers often rely on friends' advice when shopping for experience goods?

They know their friends' tastes