Econ 400 final exam review

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

Cospecialized

Which of the following products and services depend on standards? a) Cellular communications b) Internet c) Video gaming d) High-definition television e) All of the above

All of the above

Which of the following represents total surplus in t he value creation equation, (B-P) + (P-C)?

B - C

What type of strategy seeks to serve all customer groups in the market by offering a full line of related products?

Broad-coverage strategy

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

Capabilities

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

Certification bias

How does a centralized organization solve coordination problems?

Concentrates decision making authority in a one or a small group of people

What is the perceived benefit of a product per unit consumed minus the product's monetary price?

Consumer surplus

When multiple firms' price-quality positions line up along the same indifference curve offering a consumer the same amount of consumer surplus, what term describes the situation?

Consumer surplus parity

How are the coordination problems that exist around the construction of a new home generally solved?

Contractor

Which of the following terms involves the location of decision making rights and rule making authority within a hierarchy?

Control

Which of the following structures involves multiple groups and multiple levels of groupings arising from the need not just to organize individuals into groups, but to organize groups into larger groups?

Coordination

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

What type of organizational structure is typically used in planning courses for an MBA program?

Decentralized

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 the division of an organization into formal groupings?

Departmentalization

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

Disclosure

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

What term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?

Efficiency wage

Which of the following is not a characteristic of performance based pay?

Employees will always prefer performance based pay thus aligning principal/agent objectives

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

Even low quality sellers will disclose their product quality

What type of good is one whose quality can be assessed only after the customer has used it for a while?

Experience good

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

Under what type of strategy does a firm either offer a narrow set of varieties, serve a narrow set of customers, or do both?

Focus strategy

What is another term for a "win-win" business opportunity?

Gains from trade

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

Good report cards lead to more advertising

Which of the following terms describes a phenomenon whereby individuals ignore their own information about the best course of action and instead simply do what everyone else is doing?

Herding

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

Which of the following terms describes a contract based on information that cannot be observed by courts or arbitrators?

Implicit incentive contract

Which of the following statements about "flat" organizations is least true?

In a flat organization, there are fewer direct reports to a group head than in a taller firm

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

Inputs

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

Internet firms like Google and Yahoo

Which of the following is a source for horizontal differentiation?

Location

What kind of strategy is one by which a firm maintains price parity with its competitors and profits from its benefit or cost advantage primarily through high price-cost margins, rather than through a higher market share?

Margin strategy

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

Market for ideas

What type of organizational structure is one in which employees are subject to two or more sets of managers at once?

Matrix structure

Which of the following terms best describes the principle stating that when allocating effort among a variety of tasks, employees will tend to exert more effort toward those tasks that are rewarded?

Multitask principle

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

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 type of structure is the Japanese keiretsu structure?

Network structure

Which of the following statements best describes a characteristic of geographic specialization focus strategies?

Offers a variety of products and/or sells to a variety of customer groups within a narrow geography

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

Outcomes

Which of the following represents producer surplus in the value creation equation, (B-P) + (P-C)?

P-C

Which of the following management actions reflects agency problems due to the fact that information held by the agent is hard to observe?

Paying for services that seem excessive to the shareholders

Which of the following modes of task interdependence exists when two or more positions are not directly dependent on each other but are associated through their independent contributions to the success of the firm?

Pooled interdependence

What type of performance measurement based process was used to determine Jack Welch's successor, Jeffrey Immelt, as CEO of GE?

Promotion tournament

Which of the terms best describes the effect that results from supervisors giving all their subordinates average (or above average) grading to avoid making sharp distinctions between those subordinates when evaluating them?

Ratings compression

Which of the following modes of task interdependence exists when two or more workers or work groups depend on each other to do their work?

Reciprocal interdependence

What term best describes an agent who is indifferent between a sure thing and a gamble of equal expected value?

Risk neutral

Which of the following terms best describes a contract that guarantees an agent some payment, but provides enough incentive so that the agent does not shirk?

Risk-sharing contract

What term best defines a complex set of behavior patterns that Nelson and Winter view the actions of firms to be a result of?

Routines

Select the letter corresponding to the best answer. For a given consumer, any price-quality combination along the indifference curve yields the _______________.

Same consumer surplus

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

Search goods

Which of the following modes of task interdependence exists between two or more workers, positions, or groups when one depends on the outcome of others, but not vice versa?

Sequential interdependence

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

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

Small sample of outcome measures

Which of the following is a capability?

Sourcing skills

In departmentalization, which of the following is a required step?

Specifying relationships between chosen dimensions

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

Static efficiency

Self-containment emphasizes which of the following when developing coordination?

Strong lateral relations

In Chandler's classic work Strategy and Structure, what was the basic thesis he concluded by researching case studies of Dupont, GM, Standard Oil of New Jersey and Sears?

Structure follows strategy

What term coined by Michael Porter describes a firm that pursues elements of cost leadership and benefit leadership at the same time and in the process fails to achieve either a cost advantage or a benefit advantage?

Stuck in the middle

Which of the following should not be considered when selecting organizing dimensions?

Sunk costs

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

Superior access to inputs or customers

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

Switching costs

What is a benefit of the de-centralized organization coordination solution?

Takes advantage of localized information

Which of the following terms best describes the extent to which two or more positions depend on each other to do their own work?

Task interdependence

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

Which of the following terms is a concept, developed by Michael Porter, which describes the activities within firms and across firms that add value along the way to the ultimate transacted good or service?

Value chain

Which of the following is a resource?

Workers with firm-specific expertise or know-how

Which of the following is a tool a firm can use to combat agency problems?

a, b & c