WPC 470 Chapter 5 Quiz

Economic contribution is created when the

price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

Let's Talk Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?

$200

By selling a laptop at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario?

$600

Which of the following is an advantage of accounting data?

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.

_________ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it.

Consumer surplus

Measuring how a customer views a firm under the balanced scorecard framework is important because

customer perspective is directly linked to a firm's revenue and profit.

Which of the following is not a disadvantage of the balanced scorecard approach?

It fails to allow managers to prepare the company for future growth.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?

It provides only limited guidance about which performance metrics to choose.

Let's Roll Inc. and Ride 4 Ever Cycles Inc. are two competing motorcycle companies. While Let's Roll's Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ride 4 Ever Cycles is 54.2 percent. What do you infer from this financial data?

Let's Roll is less efficient than Ride 4 Ever Cycles in producing goods.

In the financial year 2016, for every $100 in revenues, Microsoft earned $21.5 in profit, while Apple earned $20.6 in profit. This demonstrates that

Microsoft's return on revenue was higher than that of Apple.

Though the microwaves manufactured by Nuked Inc. and Hot Box Inc. sell at the same price of $600 per unit, the economic value created by Nuked Inc. is more than that of Hot Box Inc. In the context of this scenario, which of the following statements is true?

Nuked has a relative cost advantage over Hot Box Inc..

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

What intangible assets do we need?

The tenet behind the triple bottom line is that

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

William estimated that a pair of Perfect Fit jeans would be worth $60 for its brand and durability. However, at the Perfect Fit store, the pair of jeans he wanted was available for $45. The difference of $15 in this scenario is referred to as the

consumer surplus.

The sum of consumer surplus and producer surplus for a good or service equals the

economic value created.

The value of goods/services in the eyes of consumers is static which makes it difficult to accurately assess what someone is willing to pay for that product and service. This limitation is most directly tied to which of the following multi-dimensional perspective below?

economic value creation

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the

efficient-market hypothesis.

Hit Me Up is an instant messaging mobile application. Users have access to a basic version with limited message recipients for free, but they have to pay a fee to have unlimited message recipients or to use advanced features. Which of the following business models does this best illustrate?

freemium

One major limitation of using shareholder value appreciation as a measure for assessing competitive advantage is that stock prices often times reflect the irrational and psychological mood and behaviors of investors. Alan Greenspan, former head of the Federal Reserve referred to this as

irrational exuberance.

If a company has 25 million shares outstanding, and each share is traded at $400, the ________ is $10 billion.

market capitalization

One major limitation of using accounting profitability as a measure for competitive advantage is its focus on ________ versus ________.

tangible assets; intangible assets

When a company makes improvements in its social, economic, and ecological performance, it is adopting a ________ approach to assessing competitive advantage.

triple-bottom-line