Q5

Sarah paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

$200

Sasha is the CEO of Enterprise Technologies, a consumer electronics manufacturer. Last year, Enterprise's return on invested capital (ROIC) was 11.6 percent, while Enterprise's closest competitor, Federation Tech, had an ROIC of 17 percent. Which of the following factors might Sasha use to convince investors to invest in Enterprise rather than Federation Tech?

Enterprise's intangible intensity was 6 percent, while Federation Tech's was 3 percent.

Total costs include fixed and variable costs. ________ costs are independent of consumer demand, whereas ________ costs change with the level of consumer demand.

Fixed; variable

consumer surplus

Max price willing to pay - actual price

________ costs capture the value of the ________ alternative use of the resources employed.

Opportunity; best

________ are the legal owners of public companies.

Shareholders

Amber is the manager of gardening supplies wholesaler DigIt Inc. The company's vision is to become the leading supplier of gardening materials in the northeast. In assessing the firm's current state, Amber has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Amber has determined that DigIt must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced-scorecard approach, what is wrong with Amber's thinking?

She has failed to account for external factors such as customer perceptions and shareholder perceptions.

Both UTech Inc. and Mirco Corp. incur a cost of $200 to manufacture a single unit of a cell phone. However, UTech Inc. charges a higher price than Mirco Corp. does, but it still sells a higher number of phones. What does this imply?

UTech Inc. creates more economic value than Mirco Corp. does.

Under the ________ framework, the question "How do we create value?" is relevant when trying to improve innovation and organizational learning.

balanced scorecard

The translation of strategy into action primarily takes place in a firm's

business model

Economic value creation is best expressed as

consumer surplus plus firm profit

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

customer experience

Managers can justify using the balanced-scorecard framework because research show that both ________ and ________ performance dimensions are important when examining the effectiveness of a firm's strategy.

quantitative, qualitative

Bioplex requires its members to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?

subscription-based

Fresher Corp. produces electric bathroom fragrance diffusers and sells the electric outer device at a market rate price. However, they lock their clients into a two-year agreement to purchase the perfume refills solely from them on a monthly basis. Which of the following business models does this best illustrate?

subscription-based

producer surplus

the amount a seller is paid for a good minus the seller's cost of providing it

economic value

the difference between the perceived benefits gained by a customer that purchases a firm's products or services and the full economic cost of these products or services

reservation price

the maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

the value (V) the consumer attaches to the dress

During the process of formulating an effective business model, a firm's managers should first

transform their strategy of how to compete into a blueprint of actions and initiatives.

The management team for Forever Power came up with the following vision statement: "Forever Power will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is most likely based on the

triple-bottom-line approach.

________ denotes the dollar amount a consumer would attach to a good or service (that is, willingness to pay).

value

economic value

worth of a good or service as determined by the market