Worksheet 3 - Final Exam

The perceived benefit of a product per unit consumed minus the product's monetary price

Consumer surplus is measured as which of the following?

The tradeoff a consumer is willing to make between price and quality

The steepness (slope) of an indifference curve indicates which of the following?

Share strategy

What kind of strategy is one by which a firm exploits its benefit or cost advantage through a higher market share rather than through high price-cost margins?

Customer specialization

What term best describes a targeting strategy in which the firm offers a variety or related products to a particular class of customers?

Stuck in the middle

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?

Maximum willingness-to-pay

What term describes the price at which a consumer is indifferent between buying a product and going without it?

Value-added analysis

What term describes the process of using market prices of unfinished and semi-finished goods to estimate the incremental value-created by distinctive parts of the value chain?

Competitive advantage

What term describes the situation when a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market?

Indifference curve

What type of curve can be used to describe the set of price-quality combinations that yields the same consumer surplus to an individual?

Search good

What type of good is one whose quality is relatively easy to evaluate before purchase?

Broad-coverage strategy

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

Sourcing skills

Which of the following is a capability?

Quality can be assessed only after the customer has used it for a while

Which of the following is a characteristic of an experience good?

A firm following a strategy of cost leadership is following a generic strategy narrow in scope

Which of the following is false with respect to the strategy of cost leadership?

They are easy to reduce to simple algorithms or procedure guides

Which of the following is not a common characteristic of capabilities?

P-C

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

B - C

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