Strategic Management
Pre-Test Questions
Course Introduction
Strategic Management explores the processes and frameworks that organizations use to achieve long-term objectives and maintain competitive advantage in dynamic environments. This course examines strategic analysis, formulation, and implementation while addressing internal and external factors affecting decision-making. Through case studies and real-world examples, students learn how to assess organizational resources, analyze industry competition, and develop strategies that align with core values and market demands. The course also emphasizes ethical considerations, global perspectives, and the leadership skills necessary for effective strategy execution.
Recommended Textbook
Managerial Economics and Business Strategy 7th Edition by Michael R. Baye
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14 Chapters
1912 Verified Questions
1912 Flashcards
Source URL: https://quizplus.com/study-set/2568
Page 2
Chapter 1: The Fundamentals of Managerial Economics
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/51121
Sample Questions
Q1) Marginal net benefits in the above table
A)initially increase, reach a maximum and then decrease.
B)initially decrease, reach a minimum and then increase.
C)remain the relatively stable over different values for the control variable.
D)initially remain relatively stable and then decrease.
Answer: B
Q2) Marginal benefit refers to:
A)the average benefits that arise by using an additional unit of the managerial control variables.
B)the additional benefits that arise by using an additional unit of the managerial control variables.
C)the change in average benefits arising from a change in the control variable.
D)none of the statements associated with this question are correct.
Answer: B
Q3) The second-order condition for maximizing net benefits is
A)d<sup>2</sup>N/dQ<sup>2</sup> < 0.
B)d(MB)/dQ < d(MC)/dQ.
C)d<sup>2</sup>B/dQ<sup>2</sup> < d<sup>2</sup>C/dQ<sup>2</sup>.
D)all of the statements associated with this question are correct. Answer: D
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Chapter 2: Market Forces: Demand and Supply
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) In a competitive market, the market demand is Q<sup>d</sup> = 60 - 6P and the market supply is Q<sup>s</sup> = 4P.The full economic price under a price ceiling of $3 is
A)6.
B)7.
C)8.
D)9.
Answer: C
Q2) Good X is an inferior good if a decrease in income leads to
A)an increase in the supply of good X.
B)a decrease in the supply of good X.
C)an increase in the demand for good X.
D)a decrease in the demand for good X.
Answer: C
Q3) The minimum wage
A)is an example of floor price.
B)leads to an increase in the number of people employed in unskilled jobs.
C)leads to a decrease in the number of people employed in skilled jobs.
D)causes an increase in social welfare.
Answer: A
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Chapter 3: Quantitative Demand Analysis
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) The demand for good X has been estimated to be lnQ<sub>x</sub><sup>d</sup> = 100 - 2.5 lnP<sub>X</sub> + 4 lnP<sub>Y</sub> + lnM.The own price elasticity of good X is A)-2.5.
B)4.0.
C)-2.5%.
D)4.0%.
Answer: A
Q2) The demand for good X is estimated to be Q<sub>x</sub><sup>d</sup> = 10,0004P<sub>X</sub> + 5P<sub>Y</sub> + 2M + A<sub>X,</sub> where P<sub>X</sub> is the price of X, P<sub>Y</sub> is the price of good Y, M is income and A<sub>X</sub> is the amount of advertising on X.Suppose the present price of good X is $50, P<sub>Y</sub> = $100, M = $25,000, and A<sub>X</sub> = 1,000 units.What is the own-price elasticity of demand for good X?
A)-0.003.
B)-0.03.
C)-0.3.
D)-3.
Answer: A
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Page 5
Chapter 4: The Theory of Individual Behavior
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Given that income is $750 and P<sub>X</sub> = $32 and P<sub>Y</sub> = $8, what is the market rate of substitution between goods X and Y?
A)-0.75
B)-3
C)-4
D)-25
Q2) If a firm offers to pay a worker $10 for each hour of leisure the worker gives up the $10 implies the
A)marginal rate of substitution between leisure and income.
B)market rate of substitution between leisure and income.
C)market rate of transformation between leisure and income.
D)marginal rate of transformation between leisure and income.
Q3) The slope of the budget line represents
A)the marginal rate of substitution.
B)the market rate of substitution.
C)the budget rate of substitution.
D)the opportunity rate of substitution.
Q4) Draw the opportunity set of a consumer with an income of $200 who faces prices of
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Chapter 5: The Production Process and Costs
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) What is the value marginal product of labor if: P = $10, MP<sub>L</sub> = $25, and AP<sub>L</sub> = 40?
A)$10,000.
B)$1,000.
C)$400.
D)$250.
Q2) Larger firms can produce a product at lower average cost than small firms when
A)Economies of scope exist.
B)Diseconomies of scale exist.
C)Economies of scale exist.
D)Cost complementarities exist.
Q3) The manager institutes an incentive structure to ensure
A)workers are in fact working at the expected potential.
B)workers are in fact working at their utility-maximizing effort level.
C)the firm produces on the production function.
D)the firm produces above the production function.
Q4) The maker of Turbotax produces software that prepares federal income tax returns.In addition, it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?
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Chapter 6: The Organization of the Firm
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Suppose a new contracting environment that requires less specialized investments is considered.This new contract will result in
A)an increase in the marginal benefit and result in a longer optimal contract.
B)an increase in the marginal benefit and result in a shorter optimal contract.
C)a decrease in the marginal benefit and result in a longer optimal contract.
D)a decrease in the marginal benefit and result in a shorter optimal contract.
Q2) Spot exchange typically involves
A)no transaction costs.
B)some transaction costs.
C)extremely high transaction costs.
D)long-term contracts.
Q3) A firm chooses the institution to purchase inputs
A)which minimizes the transactions costs of obtaining inputs.
B)in order to create more divisions.
C)which minimizes worker shirking.
D)to implement profit-sharing.
Q4) In general, automobile manufacturers produce their own engines but purchase tires from independent suppliers.Why?
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8
Chapter 7: The Nature of Industry
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117 Verified Questions
117 Flashcards
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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) A host of best-selling books advance the thesis that increases in conglomerate mergers and concentration of U.S.industry are responsible for "obscene profits." Do you agree? Explain, using the Lerner index.
Q3) The tobacco industry has a Lerner index of 0.76.Based on this information, compute the optimal markup factor.
A)4.17 times price.
B)4.17 times marginal cost.
C)0.24 times price.
D)there is not sufficient information to determine the optimal markup factor.
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9
Chapter 8: Managing in Competitive, Monopolistic,
and Monopolistically Competitive Markets
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138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/51109
Sample Questions
Q1) Which of the following market structures would you expect to yield the greatest product variety?
A)Monopoly.
B)Monopolistic Competition.
C)Bertrand Oligopoly.
D)Perfect Competition.
Q2) Consider firms operating in an industry where the own-price elasticity of demand is infinite; that is, E<sub>Q,P</sub> = -\(\infty\).Use this information to determine the type of industry in which these firms operate and the optimal advertising-to-sales ratio.
A)perfectly competitive industry and $0.
B)monopolistically competitive industry and $\(\infty\).
C)perfectly competitive industry and $\(\infty\).
D)monopolistic industry and $0.
Q3) Which of the following is true under monopoly?
A)P > ATC
B)P > MC
C)P = MR
D)P = ATC
Q4) You are a monopolist with the following cost and demand conditions:
Page 10
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Chapter 9: Basic Oligopoly Models
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) A new firm enters a market which is initially serviced by a Cournot duopoly charging a price of $20.What will the new market price be should the three firms co-exist after the entry?
A)$20.
B)below $20.
C)above $20.
D)none of the statements associated with this question are correct.
Q2) 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.
Q3) Consider a Cournot duopoly with the following inverse demand function: P = 1002Q<sub>1</sub> - 2Q<sub>2</sub>.The firms' marginal cost are identical and given by MC<sub>i</sub>(Q<sub>i</sub>) = 2Q<sub>i</sub>.Based on this information consumer surplus in this market is
A)$16.33.
B)$32.67.
C)$1,067.11.
D)$2,134.22.
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Chapter 10: Game Theory: Inside Oligopoly
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134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/181126
Sample Questions
Q1) Which of the following is a correct statement?
A)A Nash equilibrium is always perfect.
B)A perfect equilibrium is always Nash.
C)A Nash equilibrium is always perfect in a multistage game.
D)None of the statements associated with this question are correct.
Q2) Which of the following is not an important determinant of collusion in pricing games?
A)The number of firms.
B)The importance and magnitude of the item in a consumers' budget.
C)History.
D)All the statements associated with this question are important.
Q3) OPEC was an effective cartel for many years, but recently it has been unable to maintain a high price of oil.What factors do you think are contributing to the demise of OPEC?
Q4) Which of the following represents the set of possible pure strategy Nash equilibrium?
A){A, C}.
B){A, B}.
C){(A, C), (A, D), (B, C), (B, D)}.
D){C, D}.
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Chapter 11: Pricing Strategies for Firms With Market Power
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128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/51119
Sample Questions
Q1) A local video store estimates their average customer's demand per year is Q = 7 - 2P, and knows the marginal cost of each rental is $0.5.How much should the store charge for each rental if it engages in optimal two-part pricing?
A)$0.35.
B)$0.5.
C)$0.7.
D)$1.00.
Q2) Which of the following pricing strategies does not usually enhance the profits of firms with market power?
A)Price matching.
B)Cross-subsidies.
C)Two-part pricing.
D)Marginal cost pricing.
Q3) Second-degree price discrimination
A)is the practice of posting a discrete schedule of declining prices for different ranges of quantities.
B)eliminates the problem of double marginalization.
C)results in transfer pricing.
D)none of the statements associated with this question are correct.
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Page 13
Chapter 12: The Economics of Information
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Joe's search costs are $5 per search.He wants to buy a VCR for his wife for Christmas, and the lowest price he's found so far is $300.Joe thinks 80 percent of the stores charge $300 for VCR's and 20 percent charge $200.Joe's optimal decision is to
A)continue to search for a lower price since the expected benefit of an additional search is $80, which exceeds his per-unit search costs.
B)stop searching and purchase a VCR for $200.
C)continue to search for a lower price since the expected benefit of an additional search is $50, which exceeds his per-unit search costs.
D)none of the statements associated with this question are correct.
Q2) The expected profit-maximizing quantity is: A)5.
B)10.
C)25.
D)50.
Q3) During the recession in the early 1990s, retailers observed that consumers were spending a lot more time searching for good bargains than ever before, which led the retailers to lower prices.Why?
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Page 14
Chapter 13: Advanced Topics in Business Strategy
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74 Verified Questions
74 Flashcards
Source URL: https://quizplus.com/quiz/51117
Sample Questions
Q1) Bottlenecks
A)occur only in one-way networks.
B)occur only in two-way networks.
C)occur in both one-way and two-way networks.
D)are a positive externality associated with networks.
Q2) If the above payoff matrix is a simultaneous-move production game, the Nash equilibrium is for
A)both players to produce low output.
B)both players to produce high output.
C)play 1 to produce low output and player 2 to produce high output.
D)play 1 to produce high output and player 2 to produce low output.
Q3) Limit pricing will effectively deter entry when
A)the incumbent links the pre-entry price to post-entry profits.
B)the incumbent has incomplete information.
C)the entrant must commit to enter the market.
D)all of the statements associated with this question are correct.
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Chapter 14: A Managers Guide to Government in the Marketplace
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Consider the monopoly in the above graph with price regulated at $2 per unit.Monopoly profits at the regulated price (assuming the presence of fixed costs) are
A)$12.
B)$16.
C)$5.
D)There is insufficient information to determine the monopoly profits.
Q2) Which of the following raises domestic prices when demand is relatively high?
A)Domestic subsidies.
B)Lump sum tariff.
C)Excise tariff.
D)Lump sum tariff and excise tariff.
Q3) What is the domestic quantity supplied at the domestic market price?
A)22,000.
B)10,000.
C)52,000.
D)30,000.
Q4) In the 1990s Japan reduced its exports of automobiles to the United States by 28 percent.If you were the manager of a Buick dealership, how would this affect your pricing strategy? Explain.
Page 16
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