MGMT 4900 Exam Questions with Correct Answers Latest Update 2025-2026
Rhino Pictures Inc. is a large production company that controls a major portion of the movie
industry's market share along with two other firms. Despite its competitiveness with the two
other firms, it is influenced by their actions and often has to consider their strategic actions
before acting on its own. In this scenario, Rhino Pictures Inc. is most likely functioning in a(n)
_____ industry.
A. oligopolistic
B. monopolistic
C. perfectly competitive
D. monopolistically competitive - Answers A. oligopolistic
Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His
company has struggled to differentiate itself from the other high-end landscapers in the area,
but because he has hired several expensive but highly-qualified team members, Thomas is
unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a
competitive advantage?
A. Offer similar services as competitors but raise prices to increase profits B. Lower prices but
continue employing high-paid expert gardeners
C. Narrow the scope of competition and focus on unique features such as the use of organic
materials
D. Maintain prices but replace all the expert employees with less-skilled workers to control
costs - Answers C. Narrow the scope of competition and focus on unique features such as the
use of organic materials
Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa
Rica, where its main suppliers were located, would double in less than three years. This would
significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new
partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans
increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans
was able to maintain its profit margins in turbulent times. Which of the following isolating
mechanisms does this scenario best illustrate?
A. intellectual property protection
B. causal ambiguity
C. time compression diseconomies
D. better expectations of future resource value - Answers D. better expectations of future
,resource value
Which of the following scenarios illustrates a firm that has a sustainable competitive advantage?
A. Jamison Inc. generated revenue of $300,000 this financial year, which is close to the
industrial revenue average of $320,000.
B. CR Inc. almost doubled its sales to 9,000 units this year compared to its previous year's sales
of 5,000 units, though the industry average is 10,000 units.
C. Zhang Corp. was able to hold its market share of 68 percent in the social networking industry
for more than three years.
D. Peak Inc. was able to outperform its competitors with its new production system, in terms of
revenue, for a brief period of four months. - Answers C. Zhang Corp. was able to hold its market
share of 68 percent in the social networking industry for more than three years.
AccuroDiskInc.manufacturesexternalharddisksfor$32perunit,andthemaximumpricecustomersar
ewilling to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces
external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50
per unit. What does this imply?
A. AccuroDisk and TD Storage share differentiation parity
B. TD Storage has a competitive advantage over AccuroDisk in terms of perceived value
C. AccuroDisk creates a greater economic value than TD Storage
D. TD Storage is a cost-leader when compared to AccuroDisk - Answers C. AccuroDisk creates a
greater economic value than TD Storage
Which of the following forces tends to be more important in determining a firm's performance?
A. the underlying economic structure
B. the entry barriers in the industry
C. the actions of managers within the firm
D. the number and size of other firms in the industry - Answers C. the actions of managers
within the firm
In which of the following situations is the power of suppliers high in an industry?
A. Suppliers offer products that are undifferentiated.
B. Suppliers can credibly threaten to backward integrate into the industry.
, C. Suppliers depend heavily on the industry for their revenues.
D. Suppliers' industry is more concentrated than the industry it sells to. - Answers D. Suppliers'
industry is more concentrated than the industry it sells to.
Organic Eats is a restaurant that caters to the needs of a small percentage of highly health-
conscious consumers. It has an all-organic, vegan menu. Since there are very few restaurants
that offer the same unique services, customers are willing to pay a premium price for its
products and services. In this scenario, Organic Eats is following a
A. product diversification strategy.
B. liquidation strategy.
C. mass market strategy.
D. focused differentiation strategy. - Answers D. focused differentiation strategy.
Which of the following is NOT a major consideration of barriers to entry? A. Capital
requirements.
B. Brand identity.
C. Positive growth rate.
D. Economies of scale. - Answers C. Positive growth rate.
What does it mean for a firm to have an 80 percent learning curve?
A. Every time the cumulative output increases by 80 percent, the cost per unit will decline by 20
percent. B. Every time the cumulative output is doubled, the cost per unit will decline by 80
percent.
C. Every time the cumulative output goes up by 20 percent, the cost per unit will decline by 80
percent. D. Every time the cumulative output is doubled, the cost per unit will decline by 20
percent. - Answers D. Every time the cumulative output is doubled, the cost per unit will decline
by 20 percent.
Which of the following is an implication of high exit barriers in an industry? A. The number of
underperforming firms in the industry will be low.
B. The industry will face excess capacity.
C. The competitive pressure among existing firms will be low.
D. The industry will be more attractive for new entrants. - Answers B. The industry will face
excess capacity.
Rhino Pictures Inc. is a large production company that controls a major portion of the movie
industry's market share along with two other firms. Despite its competitiveness with the two
other firms, it is influenced by their actions and often has to consider their strategic actions
before acting on its own. In this scenario, Rhino Pictures Inc. is most likely functioning in a(n)
_____ industry.
A. oligopolistic
B. monopolistic
C. perfectly competitive
D. monopolistically competitive - Answers A. oligopolistic
Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His
company has struggled to differentiate itself from the other high-end landscapers in the area,
but because he has hired several expensive but highly-qualified team members, Thomas is
unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a
competitive advantage?
A. Offer similar services as competitors but raise prices to increase profits B. Lower prices but
continue employing high-paid expert gardeners
C. Narrow the scope of competition and focus on unique features such as the use of organic
materials
D. Maintain prices but replace all the expert employees with less-skilled workers to control
costs - Answers C. Narrow the scope of competition and focus on unique features such as the
use of organic materials
Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa
Rica, where its main suppliers were located, would double in less than three years. This would
significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new
partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans
increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans
was able to maintain its profit margins in turbulent times. Which of the following isolating
mechanisms does this scenario best illustrate?
A. intellectual property protection
B. causal ambiguity
C. time compression diseconomies
D. better expectations of future resource value - Answers D. better expectations of future
,resource value
Which of the following scenarios illustrates a firm that has a sustainable competitive advantage?
A. Jamison Inc. generated revenue of $300,000 this financial year, which is close to the
industrial revenue average of $320,000.
B. CR Inc. almost doubled its sales to 9,000 units this year compared to its previous year's sales
of 5,000 units, though the industry average is 10,000 units.
C. Zhang Corp. was able to hold its market share of 68 percent in the social networking industry
for more than three years.
D. Peak Inc. was able to outperform its competitors with its new production system, in terms of
revenue, for a brief period of four months. - Answers C. Zhang Corp. was able to hold its market
share of 68 percent in the social networking industry for more than three years.
AccuroDiskInc.manufacturesexternalharddisksfor$32perunit,andthemaximumpricecustomersar
ewilling to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces
external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50
per unit. What does this imply?
A. AccuroDisk and TD Storage share differentiation parity
B. TD Storage has a competitive advantage over AccuroDisk in terms of perceived value
C. AccuroDisk creates a greater economic value than TD Storage
D. TD Storage is a cost-leader when compared to AccuroDisk - Answers C. AccuroDisk creates a
greater economic value than TD Storage
Which of the following forces tends to be more important in determining a firm's performance?
A. the underlying economic structure
B. the entry barriers in the industry
C. the actions of managers within the firm
D. the number and size of other firms in the industry - Answers C. the actions of managers
within the firm
In which of the following situations is the power of suppliers high in an industry?
A. Suppliers offer products that are undifferentiated.
B. Suppliers can credibly threaten to backward integrate into the industry.
, C. Suppliers depend heavily on the industry for their revenues.
D. Suppliers' industry is more concentrated than the industry it sells to. - Answers D. Suppliers'
industry is more concentrated than the industry it sells to.
Organic Eats is a restaurant that caters to the needs of a small percentage of highly health-
conscious consumers. It has an all-organic, vegan menu. Since there are very few restaurants
that offer the same unique services, customers are willing to pay a premium price for its
products and services. In this scenario, Organic Eats is following a
A. product diversification strategy.
B. liquidation strategy.
C. mass market strategy.
D. focused differentiation strategy. - Answers D. focused differentiation strategy.
Which of the following is NOT a major consideration of barriers to entry? A. Capital
requirements.
B. Brand identity.
C. Positive growth rate.
D. Economies of scale. - Answers C. Positive growth rate.
What does it mean for a firm to have an 80 percent learning curve?
A. Every time the cumulative output increases by 80 percent, the cost per unit will decline by 20
percent. B. Every time the cumulative output is doubled, the cost per unit will decline by 80
percent.
C. Every time the cumulative output goes up by 20 percent, the cost per unit will decline by 80
percent. D. Every time the cumulative output is doubled, the cost per unit will decline by 20
percent. - Answers D. Every time the cumulative output is doubled, the cost per unit will decline
by 20 percent.
Which of the following is an implication of high exit barriers in an industry? A. The number of
underperforming firms in the industry will be low.
B. The industry will face excess capacity.
C. The competitive pressure among existing firms will be low.
D. The industry will be more attractive for new entrants. - Answers B. The industry will face
excess capacity.
