Economics of Strategy Quiz

What can determine the market structure and entry according to the text?

• Economies of Scope

• Economies of Advertising

• Economies of R&D

• Economies of Scale

What does a U-shaped cost curve imply for firms?

• Cost disadvantage for very small firms

• Cost advantage for very small firms

• Cost disadvantage for very large firms

• Cost advantage for very large firms

What is the main benefit of economies of scope mentioned in the text?

• Saving on inventories

• Reduced incremental cost of production

• Increased productivity of variable inputs

• Spreading of fixed costs

What is the cube-square rule used for in the context of economies of scale?

• Oil pipelines

• Warehousing

• Brewing tanks

• Purchasing alliances

Why is it less costly to sell to a single buyer according to the text?

• Big buyers are less price sensitive

• Big buyers drive harder bargains

• Small firms can negotiate better deals

• Small firms can afford larger inventories

What is the main advantage of umbrella branding mentioned in the text?

• Conflicting brand images

• Diseconomies of scope

• Easier introduction of new products

• Less importance of corporate brand name

What is the main reason for conflicting out in professional services firms?

• Difficulty in rewarding workers

• Difficulty in monitoring workers

• Difficulty in evaluating performance

• Difficulty in sharing sensitive information

What is the learning curve primarily associated with in the text?

• Economies of scale

• Economies of R&D

• Economies of scope

• Economies of advertising

What is the main reason for firms engaging in diversification according to the text?

• Exploiting economies of scale and scope

• Increasing managerial compensation

• Enhancing shareholder value

• Reducing risk for shareholders

What is the primary constraint on managers in publicly traded firms?

• Internal capital markets

• Diversifying acquisitions

• Market for corporate control

• Corporate governance