Acctg1102_91-E004-65

Quiz 6

Question 1

1 / 1 pts

Which of the following is NOT a factor that contributes to higher rivalry in an industry?

Fast industry growth.

High fixed costs.

Low switching costs for buyers.

Numerous competitors.

Question 2

1 / 1 pts

The following are some conditions that make a resource hard to imitate or duplicate , except

When a resource is socially complex.

When the link between resources and advantage is ambiguous.

Resources that flow from a firm’s unique historical conditions.

When sustainable competitive advantage is publicly available knowledge.

IncorrectQuestion 3

0 / 1 pts

Which of the following is not the features of resources that become the source of sustainable
competitive advantage,?

many substitutes

Difficult to imitate

Valuable

Rare

The concept that describes firms possessing different bundles of resources is

imitability

resource immobility

barriers to entry

resource heterogeneity

Question 5

1 / 1 pts

When a resource or capability is valuable, rare, hard to imitate, and non-substitutable firms may gain
competitive parity.

a temporary competitive advantage.

a sustainable competitive advantage.

a complex competitive advantage.

Which of the following is critical for a firm adopting a long-term cost-reduction strategy?

The methods of achieving cost reductions are difficult to imitate.

The strategy reduces costs by at least 10%.

The strategy is focused on reducing internal production costs.

The firm must also differentiate its product or service.

Question 7

1 / 1 pts

Attractive industries have all the following, except low buyer power

low rivalry

high supplier power

high entry barriers

Question 8

1 / 1 pts

Buyers have higher power when

switching costs are low.

the buyer industry is highly fragmented

their suppliers sell a highly differentiated product.

they are not a significant purchaser of their supplier's output.

If a firm successfully adopts a product differentiation strategy, the elasticity of demand for its products
should

be unaffected.

decrease.

become marginal.

increase.
Question 10

1 / 1 pts

The following are one of three strategies a firm can adopt in order to stay one step ahead of the forces
of competition, except

product differentiation

cost reduction

encourage product substitution

reduction in the intensity of competition

When a resource or capability is valuable, inimitable and rare, a firm may gain a

cost advantage.

sustainable competitive advantage.

temporary competitive advantage.

competitive parity.

Firms have a competitive advantage when they can deliver the same product or service benefits as
competitors at a lower cost. Also firms have a competitive advantage when they can deliver superior
product or service benefits than the competitor at a higher cost. The first statement is false and the
second statement is true.

Both statements are true.

The first statement is true and the second statement is false.

Both statements are false.

An industry is defined as

a group of firms producing products that are close substitutes.

a group of firms producing the exact same products and services.

firms that have the same resources and capabilities.

firms producing items that sell through the same distribution channels.
Question 14

1 / 1 pts

Which of the following is NOT an example of an entry barrier?

Government protection through patents or licensing requirements

Strong brands

Lower costs driven by economies of scale

Low capital requirements for entry

The following are composition of the resources and capabilities of an excellent firm performance,
except

customer’s loyalty

human capital

organizational excellence

intellectual assets

Following a peso appreciation relative to the dollar, which of the following results is expected to occur?
U.S. consumers would be hurt, and Mexican producers would be hurt.

U.S. consumers would benefit, and Mexican producers would be hurt.

U.S. consumers would be hurt, and Mexican producers would benefit.

U.S. consumers would benefit, and Mexican producers would benefit.

If the Chinese yuan devalues relative to the US dollar, then

US producers will benefit; Chinese consumers will be hurt

US producers will benefit; Chinese consumers will benefit

Currency devaluation helps domestic firms by increasing demand but hurts domestic consumers by
increasing domestic price.

US producers will be hurt; Chinese consumers will be hurt.

An individual in the United States wants to buy office equipment from England that costs 2,800 pounds.
If the exchange rate is $1.92, how much will it cost him in dollar terms?

$5,376

Need more information

$2,800

$1,458

Currency appreciation help consumers because they make imports cheaper in the domestic currency.
Also helps suppliers because they make exports less expensive in the foreign currency.

Both statements are false.

The first statement is true and the second statement is false.

The first statement is false and the second statement is true.

Both statements are true.

Should the Philippine peso devalue relative to the U.S. dollar which of the following is not true?

Filipino consumers will be hurt.

U.S. producers will benefit

U.S. consumers will not be affected.

Filipino producers will benefit.

Following an increase in Mexican interest rates relative to U.S. interest rates, which caused Mexican
investors to borrow abroad to invest domestically, which of the following is expected to occur?

The dollar would appreciate relative to the peso, and Mexican prices would increase.

The dollar would depreciate relative to the peso, and Mexican prices would decrease.

The dollar would appreciate relative to the peso, and Mexican prices would decrease.

The dollar would depreciate relative to the peso, and Mexican prices would increase.
Following are certain features of bubbles that economists have documented, except

Bubbles emerge at times when investors disagree about the significance of a big economic
development.

Bubbles can easily figure out by most businessmen, henceforth its occurrence can easily be predicted.

Financial bubbles are marked by huge increases in trading

it's more costly to bet on prices going down than up, because the bullish investors dominate.

The intersection between demand for dollars and the supply of dollars is known as the

Exchange rate

Price

Quantity

Inflation rate

Question 24

1 / 1 pts

Following an increase in Mexican interest rates relative to U.S. interest rates, which caused US investors
to invest in Mexican Bonds. Which of the following would occur?

The dollar would depreciate relative to the peso, and Mexican prices would increase.

The dollar would appreciate relative to the peso, and Mexican prices would increase.

The exchange rate would not be affected, and neither would Mexican prices.

The dollar would depreciate relative to the peso, and Mexican prices would decrease.

If buyers expect future price increases, they will ___________ their purchases to avoid it. Similarly,
sellers will __________ selling to take advantage of it.

Accelerate; accelerate

Delay; accelerate

Delay; delay

Accelerate; delay
Question 26

1 / 1 pts

Following a peso appreciation relative to the dollar, which of the following results is expected to occur?
Prices in the United States would rise, and prices in Mexico would fall.

Prices in the United States would rise, and prices in Mexico would rise.

Prices in the United States would fall, and prices in Mexico would fall.

Prices in the United States would fall, and prices in Mexico would rise.

The so-called “carry trade,” borrowing in foreign currency to buy imports or invest in a foreign country
does not affect the exchange rates, However, borrowing in foreign currencies to spend or invest
domestically, increases demand for the domestic currency, appreciating the domestic currency.

Both statements are false.

The first statement is true and the second statement is false.

Both statements are true.

The first statement is false and the second statement is true.

Bubbles (if they exist) are prices that can be explained by normal economic forces. Purchasing power
parity means that exchange rates and/or prices adjust so that tradable goods cost is the same
everywhere.

Both statements are false.

Both statements are true.

The first statement is true and the second statement is false.

The first statement is false and the second statement is true.

If buyers expect a future price increase, they will delay their purchases to avoid it. Similarly, sellers will
accelerate selling to take advantage of it.

Both statements are false.

The first statement is false and the second statement is true.

Both statements are true.

The first statement is true and the second statement is false.

Question 30

1 / 1 pts

In July 2014 the price of a Big Mac was $4.80 in the United States while in China it was only $2.73 at
market exchange rates. So the "raw" Big Mac index says that the yuan was under-valued by 43% at that
time. How would domestic inflation in China affect the Big Mac Index?

The Big Mac Index would indicate that the Dollar is more under-valued.

The Big Mac Index would indicate that the Chinese currency is less under-valued.

The Big Mac Index is not affected by inflation.

The Big Mac Index would indicate that the Chinese currency is more under-valued

Question 31

1 / 1 pts

For products like parking lots and hotels, costs of building capacity are mostly fixed or sunk and firms in
this industry typically face capacity constraints. Therefore,

if LRMR>LRMC at capacity, then the firms should price to fill capacity.

if MR>MC at capacity, then the firms should price to fill capacity.

if MR<MC at capacity, then the firms should price to fill capacity.

if LRMR<LRMC at capacity, then the firms should price to fill capacity.

Question 32
1 / 1 pts

A shoe-producing firm decides to acquire a firm that produces shoe laces. This implies that the firm’s
aggregate demand (shoes + laces) will be:

None of these

equally elastic as the individual demands.

more elastic than the individual demands.

less elastic than the individual demands.

Which of the following statements is false?

After acquiring a substitute product, reduce price on both products to eliminate price competition
between them.

If demand is unknown, and the costs of underpricing are smaller than the costs of over-pricing, then
underprice, on average, and vice-versa.

If demand is unknown, and the costs of underpricing are smaller than the costs of over-pricing, then
underprice, on average, and vice-versa.

After acquiring a complementary product, reduce price on both products to increase demand for both
products.

Question 34

1 / 1 pts

On average, if demand is unknown and costs of underpricing are _______ than the costs of overpricing,
then _________.

smaller; underprice

larger; underprice

smaller; overprice

None of these
All of the following choices are examples of promoting a firm’s product, except

end-of-aisle displays.

pricing

discount coupons.

celebrity endorsements.

Question 36

1 / 1 pts

After massive promotion of Rihanna’s latest music album, the producers reacted by raising prices for her
albums. This implies that promotion expenditures made the album demand

less elastic.

change due to psychological pricing.

more elastic.

unitary elastic.

After running a promotional campaign, the owners of a local hardware store decided to decrease the
prices for the advertised prices sold in their store. One can infer that

the promotional expenditures had no effect on demand elasticity.

the promotional expenditures made the demand for the advertised products more elastic.

the promotional expenditures made the demand for the advertised products less elastic.

the owners got it wrong. To cover the promotional expenses, they should have raised the prices.
After firm A producing one good acquired another firm B producing another good, it lowered the prices
for both goods. One can conclude that the goods were

None of these

not related.

complements.

substitutes.

Question 39

1 / 1 pts

Firms tend to raise the price of their goods after acquiring a firm that sells a substitute good because

there is an increase in the overall demand for their products.

the aggregate demand for both goods is more elastic than the demand for the individual goods.

they lose market power.

the aggregate demand for both goods is less elastic than the demand for the individual goods.

Question 40

1 / 1 pts

A firm that acquires a substitute product can reduce cannibalization by

repositioning a product so that it does not directly compete with the substitute.

doing nothing.

lowering prices on the low-margin products.

setting the same price on both products.

Sustaining competitive advantage creates a “moat” around the company to help protect its profits from
the forces of competition.

True

False

Question 42

1 / 1 pts

Resources that may generate unstable competitive advantage do not necessarily lead to a sustainable
competitive advantage.

True

False

Question 43

1 / 1 pts

Competitive advantage flows from having something that competitors can't easily duplicate

True

False

Question 44

1 / 1 pts

For a resource to be rare, it must be simultaneously available to a large number of competitors.

True

False
Question 45

1 / 1 pts

A valuable resource must allow a business to conceive of and implement strategies that improve its
efficiency or effectiveness.

True

False

Question 46

1 / 1 pts

According to the resource-based view (RBV), individual firms may exhibit sustained performance
advantages due to the superiority of their resources.

True

False

Question 47

1 / 1 pts

Resources are defined as “the tangible and intangible assets firms use to conceive of and implement
their “strategies”.

True

False

Tipping is an element of strategy by using a set of techniques to create a platform by making a

technology to a particular technological system and market.

True

False
Question 49

1 / 1 pts

Strategy is the art of matching the resources and capabilities of a firm to the opportunities and risks in
its external environment for the purpose of developing a sustainable competitive advantage

True

False

Question 50

1 / 1 pts

Investing in a foreign country or importing goods from a foreign country increases the demand for
foreign currency.

True

False

Question 51

1 / 1 pts

Borrowing in foreign currency to buy imports or invest in a foreign country devalue domestic currency.

True

False

If sellers expect a future price increase, they will accelerate their sales to take advantage of it.

True

False
Increasing demand for foreign currency leads to the depreciation or devaluation of domestic

currency.

True

False

When buyers expect prices to increase faster than the interest rate, it makes sense to borrow money to
expand buying now.

True

False

The so-called “carry trade,” borrowing in foreign currencies to spend or invest in foreign country does
not affect the exchange rates.

True

False

Question 56

1 / 1 pts

Currency devaluations help consumers because they make imports less expensive in the

domestic currency.

True

False

The bubble will never pop even if sufficient number of skeptical investor act simultaneously.

True

False
Question 58

1 / 1 pts

Bubbles persist because no one has the firepower to successfully attack them.

True

False

Question 59

1 / 1 pts

With bigger MR, reduce price (sell more) to maximize profits.

True

False

Question 60

1 / 1 pts

Reducing price at one store steals sales from the other (reduces MR at both)

to counter the falling MR, raise prices at both stores to maximize profits.

True

False