Business Strategy
Chapter Exam Questions
Course Introduction
Business Strategy explores the frameworks and tools organizations use to assess their competitive environment, formulate strategic objectives, and implement plans that drive long-term success. Through case studies, theoretical models, and real-world applications, the course examines how firms analyze industry dynamics, develop resources and capabilities, and achieve sustainable competitive advantage. Students gain practical skills in strategic decision-making, scenario analysis, and the evaluation of market opportunities and threats, preparing them to contribute effectively to the strategic direction of businesses in various industries.
Recommended Textbook
Managerial Economics and Business Strategy 7th Edition by Michael R. Baye
Available Study Resources on Quizplus
14 Chapters
1912 Verified Questions
1912 Flashcards
Source URL: https://quizplus.com/study-set/2568
Page 2
Chapter 1: The Fundamentals of Managerial Economics
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/51121
Sample Questions
Q1) Consumer-consumer rivalry arises because of:
A)human nature.
B)the limited number of suppliers.
C)the scarcity of goods available.
D)none of the statements associated with this question are correct.
Answer: C
Q2) Delta Software earned $10 million this year.Suppose the growth rate of Delta's profits and the interest rate are both constant and Delta will be in business forever.Determine the value of Delta Software when
a.The interest rate is 10 percent and profits grow by 4 percent per year.
b.The interest rate is 10 percent and profits grow by 0 percent per year.
c.The interest rate is 10 percent and profits decline by 4 percent per year.
d.The interest rate is 10 percent and profits grow by 12 percent per year.(This part of the question is tricky.)
Answer: a. 11ea693a_d77f_385c_80d0_c9dea599d4cf_TB1528_11 million.
b. 11ea693a_d77f_385d_80d0_1d9574ad075c_TB1528_11 million.
c. 11ea693a_d77f_385e_80d0_39e5c3f1e9f4_TB1528_11 million.
d.Since the profits grow faster than the interest rate, Delta Software's value is infinite.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Market Forces: Demand and Supply
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/51115
Sample Questions
Q1) Changes in the price of good A leads to a change in:
A)demand of good A.
B)demand of good B.
C)the quantity demanded of good A.
D)the quantity demanded of good B.
Answer: C
Q2) When quantity demanded exceeds quantity supplied
A)there exists a surplus of a good.
B)the price tends to fall.
C)the price is below the equilibrium price.
D)there is no excess demand.
Answer: C
Q3) Consider a market characterized by the following inverse demand and supply functions: P<sub>X</sub> = 10 - 2Q<sub>X</sub> and P<sub>X</sub> = 2 + 2Q<sub>X</sub><sub>.</sub> An $8 per unit price floor will result in a
A)shortage of 1 unit.
B)surplus of 2 units.
C)shortage of 3 units.
D)surplus of 3 units.
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Quantitative Demand Analysis
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/51114
Sample Questions
Q1) A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: lnM = 14.666 + .021 lnC - 0.036 lnr, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits.Based on this study we know that the interest elasticity is:
A)unitary.
B)zero.
C)very elastic.
D)very inelastic. Answer: D
Q2) Suppose the demand for good x is lnQ<sub>x</sub><sup>d</sup> = 21 - 0.8 lnP<sub>x</sub> - 1.6 lnP<sub>y</sub> + 6.2 lnM + 0.4 lnA<sub>x</sub>.Then we know goods x and y are:
A)substitutes.
B)complements.
C)normal goods.
D)inferior goods.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: The Theory of Individual Behavior
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/51113
Sample Questions
Q1) Suppose a manager views both quantity and profit as "goods." Such a manager will then have an indifference curve that
A)is tangent to the profit curve somewhere between quantities of 0 and 2.5.
B)is tangent to the profit curve somewhere between quantities of 2.5 and 5.
C)intersects the profit curve at a quantity exactly equal to 2.5.
D)intersects the profit curve at a quantity exactly equal to 5.
Q2) What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P<sub>x</sub> = $10, P<sub>y</sub> = $20, X = 0, and M = 400?
A)10.
B)20.
C)5.
D)0.
Q3) Suppose we are given that the value of a particular utility function is a constant.That is, U(X,Y) = c.Then, the total derivative of this relation is
A)(\(\partial\)U/\(\partial\)X)dX + (\(\partial\)U/\(\partial\)Y)dY = c.
B)(\(\partial\)U/\(\partial\)X)dX + (\(\partial\)U/\(\partial\)Y)dY = 0.
C)(\(\partial\)Y/\(\partial\)X)dX + (\(\partial\)X/\(\partial\)Y)dY = 0.
D)(\(\partial\)Y/\(\partial\)X)dU + (\(\partial\)X/\(\partial\)Y)dU = c.
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: The Production Process and Costs
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/51112
Sample Questions
Q1) The following table summarizes the short-run production function for your firm.Your product sells for $5 per unit, labor costs $5 per unit, and the rental price of capital is $20 per unit.Complete the following table, and then answer the accompanying questions.
Q2) A production function
A)defines the minimum amount of output that can be produced with inputs such as capital and labor.
B)defines the average amount of output that can be produced with inputs such as capital and labor.
C)represents the technology available for turning inputs into output.
D)is determined only by the expenditures on R&D.
Q3) For a cost function C = 100 + 10Q + Q<sup>2</sup>, the marginal cost of producing 10 units of output is A)10. B)200. C)210.
D)none of the statements associated with this question are correct.
Q4) In the text, we showed that the multiproduct cost function
Q5) Show that the Cobb-Douglas production function
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: The Organization of the Firm
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/51111
Sample Questions
Q1) Which of the following is an outside incentive that forces managers to put forth maximal effort?
A)Incentive contracts.
B)Performance bonuses.
C)Flat fees.
D)Reputation.
Q2) Which of the following is the primary disadvantage of producing inputs within a firm?
A)increases in transaction costs.
B)loss of specialization.
C)reductions in opportunism.
D)mitigation of hold-up problems.
Q3) A drawback of separating ownership from control by creating a firm is:
A)The losses of specialization.
B)Increased transaction costs.
C)The principal-agent problem.
D)Synergies of team production.
Q4) Is it necessarily in the best interest of shareholders for management to ensure that there is absolutely no shirking in the workplace? Explain.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Nature of Industry
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/181072
Sample Questions
Q1) Suppose that the demand in a particular industry is given by Q<sup>d</sup> = 1002P.When the market price in the industry is $10 per unit, total demand in the industry is ____.Furthermore, assume that each of the four largest firms in the industry sell 15 units.Based on this information, the 4-firm concentration ratio is A)demand is 80 units and the 4-firm concentration ratio is 1.00.
B)demand is 45 units and the 4-firm concentration ratio is 0.75.
C)demand is 80 units and the 4-firm concentration ratio is 0.75. D)demand is 45 units and the 4-firm concentration ratio is 0.25.
Q2) Suppose that there are two industries, A and B.There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively.There are 4-firms in industry B with equal sales of $2.5 million for each firm.The four-firm concentration ratio for industry A is:
A)0.9.
B)1.0.
C)0.8.
D)0.7.
Q3) It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Managing
in Competitive, Monopolistic, and Monopolistically Competitive Markets
Available Study Resources on Quizplus for this Chatper
138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/51109
Sample Questions
Q1) Regardless of the economic environment, every firm will maximize profits by operating at the minimum point of its average total cost curvIs this statement true or false? Explain.
Q2) Differentiated goods are a feature of a:
A)perfectly competitive market.
B)monopolistically competitive market.
C)monopolistic market.
D)monopolistically competitive market and monopolistic market.
Q3) You are the manager of a firm that sells its product in a competitive market at a price of $48.Your firm's cost function is C = 60 + 2Q<sup>2</sup>.Your firm's maximum profits are
A)$192.
B)$228.
C)$348.
D)$576.
Q4) Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?
Q5) What market can you think of, besides that for VCRs, that has shown short-run profits but, over time, has seen profits disappear due to entry?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Basic Oligopoly Models
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/181073
Sample Questions
Q1) Which of the following is not a quantity-setting oligopoly model?
A)Stackelberg.
B)Cournot.
C)Bertrand.
D)All of the choices are quantity setting models.
Q2) The market for widgets consists of two firms that produce identical products.Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms.Firm 2 is known to have a cost advantage over Firm 1.A recent study found that the (inverse) market demand curve faced by the two firms is
Q3) Two identical firms compete as a Cournot duopoly.The demand they face is P = 100 - 2Q.The cost function for each firm is C(Q) = 4Q.The equilibrium output of each firm is: A)8.
B)16.
C)32.
D)36.
Q4) The inverse demand curve for a Stackelberg duopoly is
Q5) The (inverse) demand in a Cournot duopoly is
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Game Theory: Inside Oligopoly
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/181126
Sample Questions
Q1) What should the manager do to solve the shirking problem?
A)Always monitor.
B)Never monitor.
C)Sincerely tell workers not to shirk.
D)Engage in "random" spot checks of the work place.
Q2) You are considering entering a market serviced by a monopolist.You currently earn $0 economic profits, while the monopolist earns $5.If you enter the market and the monopolist engages in a price war, you will lose $5 and the monopolist will earn $1.If the monopolist doesn't engage in a price war, you will each earn profits of $2.
a.Write out the extensive form of the above game.
b.There are two Nash equilibria for the game.What are they?
c.Is there a subgame perfect equilibrium? Explain.
d.If you were the potential entrant, would you enter? Explain why or why not.
Q3) What are the Nash equilibrium strategies for this game?
A)(low price, low price).
B)(high price, high price).
C)(low price, low price) and (high price, high price).
D)none of the statements associated with this question are correct.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Pricing Strategies for Firms With Market Power
Available Study Resources on Quizplus for this Chatper
128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/51119
Sample Questions
Q1) As manager of the only video store in town, you have noticed that on Thursday through Sunday the demand for renting your movies is much higher than it is on Monday through Wednesday.You therefore conducted a study that revealed two different market demand curves.On weekends, your inverse demand curve is
Q2) A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs.It faces an inverse demand function given by P = 50 - Q.What are the profits of the monopoly in equilibrium?
A)$300.
B)$400.
C)$500.
D)$600.
Q3) During high-peak times, what price-quantity combination should the firm charge to maximize profit?
A)P<sub>1</sub> and Q<sub>3</sub>.
B)P<sub>2</sub> and Q<sub>3</sub>.
C)P<sub>4</sub> and Q<sub>3</sub>.
D)P<sub>1</sub> and Q<sub>2</sub>.
Q4) Three consumers who want to buy a new car have the following valuations for dealer options:
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: The Economics of Information
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/51118
Sample Questions
Q1) Which project has the lowest expected value?
A)A
B)B
C)C
D)D
Q2) Risk averse persons sometimes prefer to play some gambles even if they know that those gambles are not fair, i.e., on average people lose by playing them.One plausible explanation of this seemingly paradoxical phenomenon is that:
A)The economic theory of uncertainty is not correct.
B)Gambling has entertaining effects which are not treated explicitly as part of the payoffs.
C)People's actions are not reasonable.
D)None of the statements associated with this question are correct.
Q3) The variance in the returns of project B is
A)15.
B)225.
C)40.
D)1600.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Advanced Topics in Business Strategy
Available Study Resources on Quizplus for this Chatper
74 Verified Questions
74 Flashcards
Source URL: https://quizplus.com/quiz/51117
Sample Questions
Q1) Compute the present value of Smyth Industries' profits if it remains a duopolist in this market when the interest rate is 5 percent.
A)$100 million.
B)$200 million.
C)$210 million.
D)$1.05 billion.
Q2) Which of the following is NOT an example of raising rivals' fixed costs?
A)Existing doctors in a particular medical field lobby to have new doctors to acquire new licenses.
B)Yellow Cab Company lobbying NYC Government officials that would require all taxi cab drivers to pay for a medallion - right to drive a cab in NYC.
C)Federal Express lobbying the U.S.Department of Transportation to increase annual terminal fees.
D)The New York Port authority lobbying to increase the tolls on NYC George Washington bridge.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: A Managers Guide to Government in the Marketplace
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/51116
Sample Questions
Q1) Which of the following pieces of legislations are not aimed at curbing the negative effects of asymmetric information?
A)Robison Patman Act.
B)Security Exchange Act.
C)Lanham Act.
D)Truth in Lending Simplification Act.
Q2) What is the domestic market price of sugar?
A)$15.
B)$20.
C)$30.
D)$45.
Q3) What is the socially efficient level of output?
A)10.
B)20.
C)15.
D)18.
Q4) Suppose the supply of wine by domestic firms is
Q5) Suppose the external marginal cost of pollution is
Q6) You are the manager of a monopoly that faces an inverse demand curve
To view all questions and flashcards with answers, click on the resource link above. Page 16