CH5 Quiz MGMT

A firm incurs $600 to manufacture a laptop. In the market, customers are willing to pay a maximum of $900 for the laptop priced at $1000. How much economic value is created by the firm in this example?

$300 $900 - $600 = $300

A firm incurs $3 to manufacture a pencil. In the market, customers are willing to pay a maximum of $6 for the pencil priced at $4. How much is the producer surplus in this example?

$1 $4 - $3 = $1

Harley Davidson increased their expenditure on employee training programs to make employees more efficient, thereby making its manufacturing process more cost-effective. Which of the following dimension(s) of the triple bottom line is this example highlighting?

Both people and profit (Employees and Cost-Effective)

If Firm A's return on invested capital is 16.4 percent and Firm B's return on invested capital is 20.2 percent, which firm has a competitive advantage?

Firm B

While Firm A incurs $300 to manufacture a single unit of a coffee machine, Firm B incurs a cost of $200. Both of them have priced the coffee machine at $500. However, in the market, customers are willing to pay a maximum of $600 for the coffee machine. Which of the following statement is true?

Firm B has a competitive advantage over Firm A. Firm A = $500 - $300 = $200 (Less Profit) Firm B = $500 - $200 = $300 (More Profit)

If Firm A has a higher working capital and revenue ratio than Firm B, which of the following statement is true?

Firm B is more efficient than Firm A and therefore, has a competitive advantage over Firm A.

LinkedIn, a professional social media website, allows its users to create their profiles for free but charges a premium price for additional services. This is an example of a ________ business model.

Freemium

The ratio of working capital and revenue is related to which of the following value-chain activity(ties) of the firm?

Only operations

A company sells an e-book reader at the cost price. However, the company makes its profits when users have to download or buy books online. Which of the following business models is implemented by this company?

Razor-razor-blades

Which of the following is not one of the ratios that constitute working capital turnover?

Research and development expense/Revenue