Business Economics
Exam Bank
Course Introduction
Business Economics explores the application of economic theories and principles to real-world business decision-making. The course examines how firms operate within various market structures, how they respond to changes in market conditions, and how economic factors influence strategic planning and resource allocation. Students will analyze topics such as demand and supply, production costs, pricing strategies, market competition, and the impact of government policies on businesses. By integrating microeconomic and macroeconomic perspectives, the course equips students with analytical tools to evaluate business performance, forecast economic trends, and make informed managerial decisions in a dynamic economic environment.
Recommended Textbook
Economics of Strategy 6th Edition by David
Besanko
Available Study Resources on Quizplus
14 Chapters
419 Verified Questions
419 Flashcards
Source URL: https://quizplus.com/study-set/1331
Page 2
Chapter 1: The Power of Principles: an Historical Perspective
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26572
Sample Questions
Q1) How has Atlanta been able to grow as a center of commerce despite its poor water and rail connections?
A) Widespread air transportation
B) New government regulations
C) Improved Financing
D) Better Communications
E) Better technology and innovation
Answer: A
Q2) Which of the following led to overbuilding of railroads in the 1860's and 1870's?
A) Reduction of taxes on railroads by the federal government
B) The success of railroads in Europe
C) The availability of financing due to public optimism
D) The low cost of labor to construct railroads
E) Increases in regulated freight rates by the Interstate commerce Commission
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Economies of Scale and Scope
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26573
Sample Questions
Q1) Which of the following best describes economies of scope?
A) The average cost declines as output increases
B) The average cost increases as output increases
C) The average cost remains constant as output increases
D) Savings are achieved when a firm produces a wider variety of goods
E) Savings are achieved when a firm produces a decreased variety of goods
Answer: D
Q2) Which of the following practices does not contribute to the strategic fit of Southwest Airlines?
A) No in-flight catering
B) Use of multiple types of planes
C) No use of congested airports
D) Re-engineered boarding process
E) No first class section on plane
Answer: B
Q3) Suppose the cost of producing a 30 second commercial for television is $100,000.If airtime on the evening news costs $200,000 and is viewed by 5 million people,what is the advertising cost per potential customer?
Answer: $.06 per potential customer,or $6.00 per 1000 customers
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The Vertical Boundaries of the Firm
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26574
Sample Questions
Q1) Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.If your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and market price (bailout market price in the event Dell does not buy)Pm=$22/unit,what is your company's RSI (relationship specific investment)?
Answer: $10 million
Q2) Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit and annualized cost of investment to build a hard drive factory I=$30 million.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit,what is your company's "rent?
Answer: $20 million
Q3) Which of the following is not a method to protect intellectual property?
A) Patents that are specific and complete
B) Complete contracts regarding IP with all suppliers
C) Non-disclosure agreements for employees
D) Limiting access to IP to a few key employees
E) Charging higher prices to limit access to IP
Answer: E
To view all questions and flashcards with answers, click on the resource link above.
5
Chapter 4: Integration and Its Alternatives
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26575
Sample Questions
Q1) The reduction of co-ordination and hold-up problems depends on:
a) Governance arrangements
b) Manager contracts
c) Required quality of finished product
d) Cost of upstream vertical supplies
e) None of the above
Q2) What type of strategic alliance involves two or more firms creating and together owning a new independent organization?
A) Partnership
B) Tapered integration
C) Close-knit semi-formal relationship
D) Mutual agreement
E) Joint venture
Q3) What term describes when a firm is using the least-cost production process?
A) Agency efficiency
B) Technical efficiency
C) Lean compliant
D) Economizing
E) Six sigma compliant
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Competitors and Competition
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26576
Sample Questions
Q1) The causal connection between firms is known as the:
A) Market structure formula
B) Structure, Conduct, Performance paradigm
C) Competition index
D) Herfindahl Iindex
E) Concentration, Profit connection
Q2) Which of the following is not a characteristic of substitute products X and Y?
A) They have the same or similar product performance characteristics
B) They have the same or similar occasions for use
C) They are sold in the same geographic market
D) Customers are indifferent between X and Y
E) A price increase of X while keeping the Y's price constant leads to a drop in purchases of X and an increase in purchases of Y
Q3) In a two firm market,let the marginal cost of producing a product be $20,the market demand be given by the function Q=60-P/2 and the market quantity be equal to Q +Q .What is the Cournot equilibrium quantity each firm would produce in this market?
Q4) In a three firm market where the market share split is 50%,30% & 20%,what is the Herfindahl index?
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Entry and Exit
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26577
Sample Questions
Q1) Which of the following methods is believed to be used by Brazilian cement makers to prevent entry into the market?
A) Limit pricing
B) Price leading
C) Predatory pricing
D) Quality pricing
E) Capacity expansion
Q2) What are the two types of barriers to entry?
A) Legal and strategic
B) Price and Size
C) Structural and strategic
D) Size and Legal
E) Price and Structure
Q3) Which of the following is a method a monopolist firm might use to prevent entry into a market?
A) Limit pricing
B) Predatory pricing
C) Capacity expansion
D) All of the above
E) None of the above
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Dynamics Competing Across Time
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26578
Sample Questions
Q1) What type of cooperation-inducing strategy is defined as one so compelling that that a firm would expect all other firms to adopt it?
A) Backward induction
B) Focal point
C) Always aggress
D) Coordination
E) Folk
Q2) Suppose a firm has $50 million to invest in a new market.Given market uncertainties,the firm forecasts a high-scenario where the present value of the investment is $200 million and a low-scenario where the present value of the investment is $20 million.Suppose that by waiting a year,the firm can learn with certainty which scenario will arise.Assume a 10% annual discount rate.If the firm waits one year and learns that the high-scenario will happen,what is the firm's expected net present value of the investment?
Q3) Suppose a firm has $50 million to invest in a new market.Given market uncertainties,the firm forecasts a high-scenario where the present value of the investment is $200 million and a low-scenario where the present value of the investment is $20 million.If the firm believes each scenario is equally likely and invests today,what is the net present value of the investment?
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Industry Analysis
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26579
Sample Questions
Q1) Which of the following is the most likely substitute for commercial aircraft travel between Chicago and Tokyo?
A) Bicycle
B) Teleconferencing
C) Automobile
D) Commuter train
E) Walking
Q2) Which of the following is generally thought of as a supplier in the hospital industry?
A) Medicaid
B) Admitting physicians
C) Hospital-based physician
D) Patients
E) Medicare
Q3) Who are the most powerful suppliers in professional sports?
A) Players unions
B) Referees
C) Owners
D) Politicians
E) Cities
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Strategic Positioning for Competitive Advantage
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26580
Sample Questions
Q1) Which of the following is not a common characteristic of capabilities?
A) They are valuable across multiple products or markets
B) They are tacit
C) They are easy to reduce to simple algorithms or procedure guides
D) They are embedded in what Richard Nelson and Sidney Winter call organizational routines - well-honed patterns of performing activities inside an organization
E) They can persist even though individuals leave the organization
Q2) 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?
A) Pricing strategy
B) Share strategy
C) Margin strategy
D) Focus strategy
E) Generic strategy
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Information and Value Creation
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26581
Sample Questions
Q1) Why would a report card that measures inputs possibly lead to multitasking?
A) Sellers would raise the price of goods with low quality inputs
B) Consumers would only know the "ingredients" in a production process
C) The cost of the report card would be passed on in lower product quality
D) Sellers may invest only in reported inputs but scale back on unreported inputs
E) Firms will not disclose poor report card scores
Q2) Which of the following is a grade used to evaluate quality?
A) Report card
B) Status report
C) Verification
D) Warrantee claim
E) Product statement
Q3) Which of the following best describes the consumer's shopping problem?
A) Having enough money to purchase all necessary goods and services
B) Finding the seller that offers the highest value of B - P
C) Determining the quality of products
D) Locating sellers that provide the required products
E) Selecting between brand products and non-brand products.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Sustaining Competitive Advantage
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26582
Sample Questions
Q1) What term best describes a resource that cannot "sell itself" to the highest bidder?
A) Isolated
B) Value-creating
C) Scarce
D) Imperfectly mobile
E) Profit maximizing
Q2) What term describes the situation where a firm does exceedingly well due to good luck or exceedingly poorly due to bad luck,but returns to normal performance following?
A) Regression to the mean
B) Competitive advantage
C) Persistent performer
D) Sustainable firm
E) Predictable performance
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Performance Measurement and Incentives
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/26583
Sample Questions
Q1) Given an employee cost of effort function (where e is given in hours worked per week and each unit of e produces an extra $100 in sales): c(e)= 0 if e<=40 (1/3)*(e-40)² if e>40
If the firm offers a salary-plus-commission job of $500 per week plus 20% of sales,how can we write the employee's payoff function? What is the employee's total compensation for working a 46 hour workweek (Note: This is the compensation and not payoff net of effort costs)?
Q2) How does a centralized organization solve coordination problems?
A) Allows for face to face communication
B) Creates a smaller organization
C) Reduces the costs of business
D) Concentrates decision making authority in a one or a small group of people
E) Information can take more time to trickle down
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Strategy and Structure
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26584
Sample Questions
Q1) Aligning individual and group tasks with those of the firm and aligning incentives so that individuals and groups will consistently work in the same direction is known as:
A) Coordination
B) Agency control
C) Accountability
D) Dimensional alignment
E) Unitary functional alignment
Q2) What type of organizational structure is one in which there is a single department responsible for each of the basic business functions within the firm?
A) Unitary functional structure
B) Multidivisional structure
C) Matrix structure
D) Network structure
E) Individual structure
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Environment, power, and Culture
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/26585
Sample Questions
Q1) Which of the following refers to when a firm with a patent uses its market power to set a high price - cost margin?
A) Cost power
B) Pricing power
C) Legal power
D) Limiting power
E) Structural power
Q2) Which of the following is true about culture?
A) Culture increases agency costs
B) Culture reduces bargaining costs
C) Culture reduces transactions costs
D) Culture increases economic costs
E) culture has no effect on costs
Q3) Which of the following terms best refers to the exercise or use of power in a given situation by an individual?
A) Control
B) Authority
C) Culture
D) Influence
E) Contracts
To view all questions and flashcards with answers, click on the resource link above. Page 16