test

Approximate observed median learning curve slope for typical firms

.8

Which of the following is not generally a potential benefit of diversification? A control systems rewarding/penalizing division managers based on business unit objectives B Economies of scale and scope C Economizing on transaction costs D Diversifying shareholder portfolios E Identifying undervalued firms

A Control systems rewarding/penalizing division managers based on business unit objective

Vertical Boundaries of a firm

Activities that define what the firm performs itself as opposed to purchasing from independent firms in the market. Which steps of the vertical chain take place within the firm

Which of the following is a source of diseconomies of scale at a large firm? Labor costs spreading specialized resource too thin conflict of interest incentive processes All of the above

All of the above

What is a market firm?

An independent outsourcing partner

backward integration

An organizational arrangement in which a downstream firms owns the assets of an upstream firm, so that the downstream firm has control over both operating systems

Matchmakers between manufacturers and sellers are called:

Brokers

What are agency costs?

Costs associated with slack effort and with the administrative controls to deter it

What term describes features that need to relate to each other in a precise fashion otherwise they lost a significant portion of their economic value?

Design Attributes

What causes finished goods prices not to maximize the joint profits of a manufacturer and its supplier?

Double marginalization

What are economies of density as referred to in the airline industry?

Economies of scale along a given route

The revenue destruction effect in oligopolies occurs when

Firms independently maximize their own profits

Which of the following is the definition of competitors

Firms whose strategic choices directly affect one another

Suppose we have two firms that enter into a transaction where firm 1 is upstream of firm 2 in a vertical chain. What term best describes the organization of the transaction where firm 1 owns the assets of firm 2

Forward integration

What group/type of preferences describes when tastes differ markedly from one person to the next and result in horizontal differentiation

Idiosyncratic preferences

types of barriers to entry

Licensing requirements, large-scale investments, and access to scarce resources government economies of scale

bounded rationality

Limits on the capacity of individuals to process information, deal with complexing and pursue rational aims

What kind of economies come from reductions in average costs due to increases in capacity utilization?

Long-run economies of scale

What is defined by the number and size distribution of the firms in a market

Market structure

Suppose we have two firms that enter into a transaction where firm 1 is upstream of firm 2 in a vertical chain. what term describes the organization of the transaction where the two firms are independent each with control over its own assets

Noninteraction

What happens when the process by which governance develops exhibits path dependence

Past circumstances could exclude certain possible governance arrangements in the future

In what type of market structure do sellers set identical prices and are prices generally driven down to marginal costs

Perfect competition

mass production

Process of making large quantities of a product quickly and cheaply

What does it mean for a manufacturing form to vertically integrate?

Produce raw materials and distribute finished goods on their own.

What concept describes the situation where the owner of an asset grants another party the right to use that asset but the owner retains all controlling rights that are not explicitly stipulated in the contract

Residual rights of control

What is the gaizhi process?

Restructuring whereby small firms are leased or sold

Which of the following best describes economies of scope

Savings are achieved when a firm produces a wider variety of goods

The following type of fit (used in aide in coordination along all dimensions of production) explains where the steps of a particular process must occur in a particular order?

Sequence Fit

A short-run decision not to produce anything during a specific period of time because of current market conditions

Shutdown

Complete Contracts

Stipulate each party's responsibilities and rights for each and every contingency that could conceivably arise during the transaction.

Costs that have already incurred and cannot be recovered

Sunk costs

Which is not an exit barrier for firms in an industry

Sunk costs

Exit barriers for a firm in an industry

Sunk costs Labor agreements or commitments to purchase raw materials obligation to input supplies government restrictions

The following describes when a manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms.

Tapered integration

What term describes when a firm is using the least-cost production process?

Technical efficiency

What is a catchment area?

The contiguous area from which a firm draws most of its customers

Not a product specified to fixed cost

The cost of administrative expenses

What are influence costs?

The costs of activities aimed at affecting the distribution of benefits in an organization

MES of production

The minimum point on a U shared average cost curve

What is throughput?

The movement of inputs and outputs through a production process

Clearly explain umbrella branding and how it aids economies of scale and scope

Umbrella branding is when customers use information in advertising about one product to make inferences about another product with the same name thereby reducing advertising costs per effective image

What is the revenue destruction effect

When a firm explands their output but lowers their prices losing revenue on all units it would have sold at the higher prices

When is reputation a most effective entry barrier?

When incumbents have long-standing relationships with suppliers and customers

cross-price elasticity of demand

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

Suppose we have two firms that enter into a transaction where firm 1 is upstream of firm 2 in a vertical chain. What term best describes the organization of the transaction where firm 2 owns firm 1

backwards intergration

barriers to entry

business practices or conditions that make it difficult for new firms to enter the market

what is the term defined as the withdrawal of a product from a market

exit

economies of scale

factors that cause a producer's average cost per unit to fall as output rises

The reduction of co-ordination and hold-up problems depends on

governance arrangements

A characteristic of an implicit contract?

it is an understanding between parties in a business relationship

The practice whereby an incumbent firm can discourage entry by charging a low price before entry occurs

limit pricing

In what type of market do the actions of individual firms materially affect the overall market

oligopoly

The process by which governance develops is known as

path dependence

The practice of setting a price with the objective of driving new entrants or existing firms out of business

predatory pricing

mass production

production of goods in large numbers through the use of machinery and assembly lines

Contract Law

set of laws that specify what constitutes a legally enforceable agreement

economies of scope

the ability to use one resource to provide many different products and services

Two or more parties expend resources battling with each other

war of attrition