Transportation & Logistics 2

Carrier pricing decisions fall into three categories. The categories are setting prices for a new service, modifying prices over time, and: a. responding to price changes. b. reacting to government policies. c. anticipating future market conditions. d. changing prices in response to government instruction.

a. responding to price changes.

What is one of the strengths of the railroad industry? a. that it is not as affected by the weather as are other modes b. that the railroads have large carrying capacity c. that it can move products in both directions d. that geographical barriers are not as formidable as they are for other modes

b. that the railroads have large carrying capacity

Which of the following is not a condition for pure competition? a. Large number of sellers b. Sellers are small enough that no one can overly influence the market c. Involves a heterogeneous product or service d. Unrestricted entry

c. Involves a heterogeneous product or service

What is the largest single expense item for trucking firms? a. Fuel and taxes b. Equipment purchases and maintenance c. Labor d. Insurance and management salaries

c. Labor

The major cost element borne by the railroad industry is the: a. Rolling Stock b. Fuel costs c. Rights of way d. Insurance

c. Rights of way

What is one of the primary reasons for the growth of trucking after World War II? a. Trucks became larger and faster b. Shippers liked the door to door service which trucks could provide c. The Interstate Highway System was constructed which allowed trucks to give faster service over longer distances. d. The railroads gave up on truck type freight and stopped seeking it.

c. The Interstate Highway System was constructed which allowed trucks to give faster service over longer distances.

What commodity accounted for 6,204,000 railcar loads in 2012? a. Nonmetallic minerals b. Food c. Farm products d. Coal

d. Coal

The requirements for a truck driver's license are defined by: a. Federal Motor Carrier Safety Administration b. National Highway Traffic Safety Board c. Federal Highway Administration d. The driver's home state

a. Federal Motor Carrier Safety Administration

What was the purpose of the legislation which created Amtrak? a. It relieved railroads from the responsibility of providing passenger service b. It allowed the government to provide service without concern for profit c. It allowed the states to take over commuter service d. It allowed the railroads to get rid of track that was only used by passenger trains

a. It relieved railroads from the responsibility of providing passenger service

What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach? a. Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means. b. Motor carriers are structured such as to make allocation extremely difficult. c. Rail carriers have difficulty defining their common costs as they have wide spread geographic operations d. All transport firms have significant difficulty with cost concepts due the very nature of their operations

a. Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means.

What does most of the trucking industry consist of? a. carriers operating 6 or fewer trucks b. private trucking c. LTL carriers d. specialized carriers

a. carriers operating 6 or fewer trucks

Who are the owners the greatest percentage of rolling stock in use? a. class I railroads b. federal government for military moves c. private car leasing firms and shippers d. investment and financial firms

a. class I railroads

There are several types of truck terminals. Which one is not used by LTL carriers? a. fuel terminals b. PUD terminals c. Break bulk terminals d. Relay terminals

a. fuel terminals

The railroads dominate the market for: a. hauling 30,000 pounds or more over 300 miles. b. hauling 60,000 pounds or less than 100 miles. c. oversize and over-dimension shipments. d. coal and chemicals.

a. hauling 30,000 pounds or more over 300 miles.

The decision as to terminal location: a. is relatively more difficult for trucking than other modes b. is concerned with whether it is to be a line haul or PUD facility c. is based on whether it is to serve a truckload or LTL carrier d. is comparatively simple when contrasted with other management decisions

a. is relatively more difficult for trucking than other modes

What do the users of truck service benefit from? a. lower inventory levels due to smaller shipments that other modes b. trailers come in a variety of configurations which fit to most types of freight c. the fact that drivers will load and unload shipments d. They are the largest of the five modes

a. lower inventory levels due to smaller shipments that other modes

Which is a major reason for the decline in the number of rail companies? a. mergers and unification occurring in the railroad industry b. government restrictions on rail ownership c. loss of business to other modes d. desire of management to invest in other areas of business

a. mergers and unification occurring in the railroad industry

Railroads are: a. more energy efficient than most other modes b. more likely to haul energy producing materials than other modes c. not as energy efficient as most other modes d. buying more energy efficient locomotives

a. more energy efficient than most other modes

Three necessary conditions must be met before a seller can practice third-degree price discrimination. The conditions are: buyers must be separated into groups or submarkets according to their elasticities of demand, the seller must possess some degree of monopoly power, and a. the seller must prevent transfer of sales between the groups or submarkets. b. the seller must have "market dominance". c. the buyer must have profit maximization as a goal. d. the buyer must have variable costs that have to be recovered.

a. the seller must prevent transfer of sales between the groups or submarkets.

How many Class 1 rail companies are there? a. 5 b. 7 c. 66 d. 18

b. 7

The basic unit of measurement for railroad freight handling is known as the: a. unit load. b. Carload c. freight load. d. capacity load.

b. Carload

The basic types of rates are class, exception and: a. Mileage b. Commodity c. Standard d. Discount

b. Commodity

What led to the erosion of rail dominance in U.S. transportation? a. Passenger air service in the 1920s b. Government funded construction of roads c. Steel price increase d. Coal price increase

b. Government funded construction of roads

What of the following is not one of the current issues facing the trucking industry in the future? a. Safety b. Highway construction with its resultant delays c. Technology d. Financial Stability

b. Highway construction with its resultant delays

Value of service pricing is best defined as: a. pricing based upon common costs b. Pricing based upon what the traffic will bear c. pricing based on marginal costs d. pricing based on average costs

b. Pricing based upon what the traffic will bear

What is one of the service characteristics of the trucking industry? a. Trucks are built to fit on existing highways b. Trucks have a speed advantage for shipments less than 500 miles c. Truck rates are cheaper than rail or air d. Trucks are easier to load than rail cars

b. Trucks have a speed advantage for shipments less than 500 miles

Under transportation regulation, the amount found in a Tariff as payment to a carrier for performing a given transport service is called a: a. price b. rate c. demand charge d. supply charge

b. rate

What is a skimming price? a. a price meant to skim off the most profit able traffic b. a means to maximize profit until competitors enter the market c. a price which allows a carrier to enter a new market. d. One that allows the carrier to transport only that traffic of the shipper that the carrier feels to be profitable.

b. a means to maximize profit until competitors enter the market

Third degree price discrimination is defined as: a. While rarely prosecuted, it is illegal and a misdemeanor versus a felony as defined by the Surface Transportation Board Act b. charging different prices to different buyers who use the same commodity or service c. permissible only when the buyer has requested rebates d. the least serious type of discrimination as versus first degree

b. charging different prices to different buyers who use the same commodity or service

Value of service pricing is also called: a. charging a rate which includes a high profit b. charging what the traffic will bear c. charging a price which favors one mode over another d. charging a rate that has shown that shippers will use it to move their traffic

b. charging what the traffic will bear

The type of cost created from a situation where the production of one service necessarily entails the production of another service is known as a: a. separable unique cost. b. common cost. c. fixed universal cost. d. variable general cost.

b. common cost.

Which type of railroad car has the greatest numbers in service? a. tank car b. covered hopper c. flat car d. Gondola

b. covered hopper

For the theory of contestable markets to work, four conditions have to be met: no barriers to market entry, no economies of scale present, consumer willingness to switch between carriers, and a. sellers and buyers of such small size that price or supply cannot be influenced. b. existing carriers prevented from responding to new entrants' lower prices. c. mutual interdependence between various sellers. d. no one seller controls a significant portion of the market.

b. existing carriers prevented from responding to new entrants' lower prices.

Where does funding for highways come from? a. income taxes b. highway user taxes c. state income taxes d. block grants from the federal government

b. highway user taxes

One of the benefits of a railroad merger is: a. there are fewer grade crossings b. less frequent interchanges between companies means faster service c. cities and towns get back land once used for railroads d. The STB does not have as many companies to regulate.

b. less frequent interchanges between companies means faster service

"There are _____ economies of scale in the trucking industry." a. Significant b. no major c. management driven opportunities for d. some government suggested

b. no major

What is the major cost element of the railroad? a. operation and maintenance of locomotives b. operation and maintenance of rights c. operation and maintenance of railcars d. operation and maintenance of yards and terminals

b. operation and maintenance of rights

There is a relatively small amount of capital required to enter: a. the private carriage business b. the truckload industry c. The pickup and delivery sector d. The line haul sector

b. the truckload industry

What is the difference between pure competition and monopolistic competition? a. minimal, as the conditions for each are quite similar. b. under pure competition there are many sellers and the product is homogeneous c. while there are many sellers, there is some differentiation in the product d. not as great as there are with an oligopoly

b. under pure competition there are many sellers and the product is homogeneous

LTL carriers must make the same type of equipment decisions as TL along with deciding: a. what commodities to haul b. where to deploy this equipment c. line haul versus PUD d. what color to paint the trucks

b. where to deploy this equipment

What percentage of rail revenue is earned by local carriers? a. 2.1 Percent b. 1.8 Percent c. 2.6 Percent d. 28 Percent

c. 2.6 Percent

How many rail mergers have occurred in the last 30 years? a. 15 b. 50 c. 28 d. 18

c. 28

What type of trailer can be coupled in twos and threes? a. 53 foot b. 48 foot c. 28 foot d. no trailer can be hooked in a series of three

c. 28 foot

Intermodal traffic expanded by _____ from 1980 to 2012. a. 100 percent b. 365 percent c. 319 percent d. 300 percent

c. 319 percent

During 2009, railroads carried what percentage of all intercity ton miles moved? a. 47.1 percent b. 43.0 percent c. 39.9 percent d. 50.2 percent

c. 39.9 percent

What is the standard track gauge in the U.S? a. 5 Feet b. 6 Foot 2 Inches c. 4 Foot 8.5 Inches d. 4 Foot 10 Inches

c. 4 Foot 8.5 Inches

Looking at your profit and loss statement you note that you have operating expenses of $10M and operating revenue of $14M, what is your operating ratio? a. 140.00 b. 68.12 c. 71.41 d. Not enough information to tell

c. 71.41

The Federal Highway Trust Fund pays for what percentage of construction cost on the interstate highway system? a. 25% b. 100% c. 90% d. None

c. 90%

Railroad per unit costs decline as traffic increases. What is the reason for this cost behavior? a. A high proportion of variable costs in the cost structure b. A low proportion of fixed costs in the cost structure c. A large proportion of fixed costs in the cost structure d. Limited capital investment by the railroads

c. A large proportion of fixed costs in the cost structure

What is the status of competition within the motor carrier industry? a. Only carriers of the same type compete against each other such LTL versus LTL or TL versus TL carriers. b. For hire carriers only compete against private carriers c. The industry is highly competitive with competition between all carriers as well as with firms such as United Parcel Service and FedEx d. Truckload carriers only compete with contract carriers

c. The industry is highly competitive with competition between all carriers as well as with firms such as United Parcel Service and FedEx

What is a Private Carrier? a. a trucking firm whose stock is not listed on any of the stock exchanges b. a trucking firm whose name does not appear on the equipment c. a trucking operation that only hauls freight for the firm which owns it d. a trucking firm that is not registered with the FMCSA

c. a trucking operation that only hauls freight for the firm which owns it

Price is a concept relating to how post-deregulation transportation firms determine and impose charges for their services. Which is a distinguishing feature of this concept of price? a. the amount found in a Tariff Book as payment to a carrier for performing a transport service b. a lawful charge imposed by a carrier on a commodity movement c. a value or level that is determined based on prevailing market forces d. a charge determined primarily by considering a carrier's costs only

c. a value or level that is determined based on prevailing market forces

This type of rate applies to or from whole regions, rather than points within a region. a. joint rate b. local rate c. group rate d. incentive rate

c. group rate

The trucking industry is characterized as having: a. small investment requirements b. easy sources of financing c. high variable and low fixed costs d. costly government requirements

c. high variable and low fixed costs

The demand for freight: a. originates when the carrier asks for the business b. starts when the shipper calls the railroad to provide equipment to move a shipment c. is a derived demand based on the demand for products d. is based upon government quotas

c. is a derived demand based on the demand for products

What do the majority of rail movements involve? a. manufactured goods b. bulk liquids and coal c. low value, heavy commodities d. consumer goods

c. low value, heavy commodities

There are two separate concepts in Cost of Service pricing. They are: a. head haul, back haul and extent of competition b. commodity and density c. prices based on average or marginal cost d. competition and direction of travel

c. prices based on average or marginal cost

Value of service pricing is based on the concept which states: a. shippers should pay rates high enough to insure a high profit for the carrier. b. carriers should set prices based on the level of service they offer c. rates should be related to value of the commodity - the higher the value of the commodity the higher the rate should be d. shippers should offer a price that they feel is fair in relation to the service offered.

c. rates should be related to value of the commodity - the higher the value of the commodity the higher the rate should be

As shown in Figure 4.1 which of the following is not a simplifying assumption? a. Firm's products or services are homogeneous b. only one group of customers c. there are costs which are not the responsibility of the customer d. the firm possess some monopolistic power

c. there are costs which are not the responsibility of the customer

The firm is in a decreasing cost industry, and its prices are based upon strict marginal costs. The firm experiences a loss. In this case, for the firm to recover its fixed costs, it must use marginal cost as a floor for its prices, and: a. try to take business away from competing modes and carriers. b. convince its customers to pay more for the services offered. c. use the value of service to determine how high above marginal cost the price should be set. d. ask the government to intervene so they can raise the minimum cost level.

c. use the value of service to determine how high above marginal cost the price should be set.

Intramodel competition is: a. the joint use of trucks and railroads to serve common customers b. trucking companies underbidding other modes to secure business c. various modes seeking to gain market share from other modes d. a government sponsored activity

c. various modes seeking to gain market share from other modes

When did scheduled common carrier freight and passenger service begin in the U.S.? a. 1918 b. 1868 c. 1789 d. 1830

d. 1830

All carriers receive a safety fitness rating. Who makes the inspection and determines the rating? a. Surface Transportation Board b. National Highway Traffic Safety Board c. Federal Highway Administration d. Federal Motor Carrier Safety Administration

d. Federal Motor Carrier Safety Administration

Which agency within the Department of Transportation governs specifications of trucks such as number of lights, tires and other operating parts? a. Surface Transportation Board b. National Highway Traffic Safety Board c. Federal Highway Administration d. Federal Motor Carrier Safety Administration

d. Federal Motor Carrier Safety Administration

What is the primary division between motor carriers? a. Local and long haul b. LTL and Truckload c. Intrastate and interstate d. For hire and private

d. For hire and private

Who is the largest single customer of some rail roads? a. FedEx b. DHL c. Walmart d. UPS

d. UPS

How is the Relevant Market Structure in transportation described? a. by comparing fixed costs with variable costs b. by determining all the areas which the carrier can serve effectively c. by generally describing all possible origin and destination points for each commodity d. by identifying the relevant market area for one commodity moving between two points

d. by identifying the relevant market area for one commodity moving between two points

The relevant market structure under deregulation is described by a theory which substitutes potential competition for the active participation of many sellers. What is this theory called? a. the law of supply and demand b. marginal utility c. monopolistic competition d. contestable markets

d. contestable markets

Which best characterizes the short-run cost structure of the railroads? a. low variable costs, high direct separable costs b. low fixed costs, low variable costs c. low joint costs, high separable costs d. large proportion of indirect fixed costs

d. large proportion of indirect fixed costs

Railroad carloadings have declined since 1900. What is the primary reason for the decline? a. competition by foreign transportation b. fuel efficient smaller cars c. reduction in line trackage d. larger cars and increasing car productivity

d. larger cars and increasing car productivity

What is the difference between TOFC and COFC service? a. TOFC is slower and cheaper b. not all railroads can handle COFC c. that COFC is more costly d. one method moves the trailer on its wheels and the other moves only the "box" or the container.

d. one method moves the trailer on its wheels and the other moves only the "box" or the container.

A profit-maximizing oriented carrier will not set a price in the long-run that would: a. reduce variable costs. b. increase fixed costs. c. increase customer satisfaction with services rendered. d. prohibit the movement of freight or passengers.

d. prohibit the movement of freight or passengers.

Which is correct regarding value-of-service pricing? a. the model is used to determine the lower limit of freight rates b. the model considers the supply side of the transportation pricing function c. the value of the product is considered to be irrelevant in the determination of the freight rate d. the model considers the ability of the commodity to bear a charge

d. the model considers the ability of the commodity to bear a charge

What do motor carriers haul primarily? a. paper and allied products b. Grain c. coal and ore d. various manufactured commodity categories

d. various manufactured commodity categories